Magin v Workers Compensation Nominal Insurer (iCare)

CERTIFICATE OF DETERMINATION OF MEMBER
CITATION:	Magin v Workers Compensation Nominal Insurer (iCare) & Ors [2023] NSWPIC 284
APPLICANT:	Daniel Magin
FIRST RESPONDENT:	Outbound Impact Pty Ltd
SECOND RESPONDENT:	Workers Compensation Nominal Insurer (iCare)
MEMBER:	Cameron Burge
DATE OF DECISION:	16 June 2023
CATCHWORDS:	WORKERS COMPENSATION - Claim for weekly payment; parties agree the applicant was a deemed worker of first respondent, that he suffered a psychological injury and that since the deemed date of injury he has been permanently incapacitated for employment; only issue in dispute is the applicant’s pre-injury average weekly earnings (PIAWE); Held – the provisions of clause 8C and clause 8D of the Workers Compensation Regulation 2016 apply to the benefit of the applicant in reducing the relevant earnings period for the purposes of calculating his PIAWE to the period between 9 December 2021 when he was first paid and 25 February 2022, the date he was last paid and the first date of his incapacity for employment; accordingly, the applicant’s PIAWE was $727.27 per week; the second respondent ordered to pay the applicant weekly compensation as set out in the Certificate of Determination, based on the PIAWE referred to from 22 June 2022 to date and continuing, pursuant to sections 36 and 37 of the Workers Compensation Act 1987; the first respondent is to repay the second respondent for any compensation payments made to the applicant.
DETERMINATIONS MADE:

The Commission determines:

The applicant was a deemed worker of the first respondent on and from 20 September 2021.
The applicant suffered a psychological injury in the course of his deemed employment with the respondent, with a deemed date of injury of 23 February 2022.
At the time of the applicant's deemed employment including the deemed date of injury, the first respondent was uninsured for Workers Compensation purposes.
The applicant's pre-injury average weekly earnings (PIAWE) at the deemed date of injury were $727.27 per week.
As a result of the injury referred to in (2) above, the applicant suffered and continues to suffer total incapacity for employment.
The second respondent is to pay the applicant weekly compensation as follows:
(a) pursuant to s 36 of the Workers Compensation Act 1987 at the rate of $690.91 per week for the period 22 June 2022 to 21 September 2022, and
(b) from 22 September 2022 to date and continuing pursuant to s 37 of the Workers Compensation Act 1987 at the rate of $581.82 per week.

The first respondent is to repay the second respondent for any compensation payments made to the applicant.

STATEMENT OF REASONS

BACKGROUND

There is no issue the applicant, Daniel Magin was at all material times a deemed employee of Outbound Impact Pty Ltd, the first respondent. There is also no issue that at all relevant times the first respondent was uninsured for Workers Compensation purposes and accordingly the Workers Compensation nominal insurer (iCare), the second respondent was joined to these proceedings.
The parties agree the applicant suffered a psychological injury in the course of his deemed employment with the first respondent, with a deemed date of injury of 23 February 2022. There is also no issue that as a result of his injury, the applicant has since 23 February 2022 being totally incapacitated for employment.
The applicant brings these proceedings seeking payment of weekly compensation from 22 June 2022 to date and continuing. The parties all agree the only issue to be determined by the Personal Injury Commission (Commission) is the applicant's pre-injury average weekly earnings (PIAWE).

ISSUES FOR DETERMINATION

The only issue for determination is applicant’s PIAWE.

PROCEDURE BEFORE THE COMMISSION

I am satisfied that the parties to the dispute understand the nature of the application and the legal implications of any assertion made in the information supplied. I have used my best endeavours in attempting to bring the parties to the dispute to a settlement acceptable to all of them. I am satisfied that the parties have had sufficient opportunity to explore settlement and that they have been unable to reach an agreed resolution of the dispute.
The parties attended a hearing on 18 April 2023. On that occasion, the applicant was represented by Mr McEnaney instructed by Mr Taouk. The respondent was represented by Mr Stockley of counsel instructed by Mr Smith. The second respondent was represented by Ms Compton instructed by Ms Davis.
At the conclusion of the allocated time for hearing, the Commission made directions for the logging of it and submissions on the issue of the applicant’s PIAWE. The parties have reached lodged written submissions concerning this issue.

EVIDENCE

Documentary evidence

The following documents were in evidence before the Commission and considered in making this determination:
(a)    Application to Resolve a Dispute (the Application);
(b)    Reply of the first respondent, and
(c)    Reply of the second respondent.

Oral evidence

There was no oral evidence called at the hearing.

FINDINGS AND REASONS

The amount of the applicant’s PIAWE

The central facts of this matter are now largely uncontested. There is no issue the applicant was a deemed employee of the first respondent on and from 20 September 2021, being the date the first respondent was incorporated. There is also no issue that during the period of the applicant's deemed employment from 20 September 2021 to 23 February 2022, he received a total of $8,000 in payments from the first respondent.
Before its denial of liability, the second respondent paid the applicant weekly compensation. The maximum weekly payment disclosed was $361.95 pursuant to s 36 of the Workers Compensation Act 1987 (the 1987 Act).
The parties were directed to lodge written submissions on whether any issues pursuant to s 289A of the Workplace Injury Management and Workers' Compensation Act 1998 (the 1998 Act) arose with regards to any requirement for the respondents to be granted leave to raise a question of the applicant's PIAWE.
The first respondent made submissions addressing s 289A, whilst the second respondent tangentially referred to the question of the applicant’s PIAWE by noting it had been in dispute since the lodging of the Reply, given the applicant's PIAWE was listed in that document as $0, in circumstances where it was denied he was a worker.
For his part, the applicant's submissions did not address the question of the requirement for leave to be granted to raise a dispute concerning PIAWE. The issue was raised as a potential cause of argument by Mr McEnaney before the hearing was adjourned; however, as his written submissions have not addressed that issue, I consider the applicant concedes there is no requirement for the respondents to seek leave to raise the issue of the applicant's PIAWE.
Moreover, were it the case leave was required to raise the question of the applicant’s PIAWE, I would be minded to grant it. The first respondent's PIAWE calculation set out in its Reply was, in my view, sufficient to raise a dispute as to the applicant's earnings and accordingly leave to raise a fresh dispute was not required. The substance of the first respondent's position was disclosed by that calculation of a $0 PIAWE, and in any event the first respondent as an uninsured employer was not obliged to issue a dispute notice pursuant to s 78. The threshold dispute between the parties involved whether, to what extent and how the applicant will be remunerated. The evidence which the parties sought to lead in relation to that issue is before the Commission. No application was made for any late documents to be lodged, nor were any Applications to Admit Late Documents lodged in the lead up to the hearing.
In the circumstances, should the requirement for leave to raise the dispute have been necessary, which I have found it is not, I would have exercised my discretion to allow the dispute to be raised noting the appropriate matters to take into consideration, as set out in Mateus v Zodune (2007) NSWWCCPD 227.
Turning to the substantive issue in dispute, the calculation of the applicant's PIAWE.
The first respondent's submissions are that the simple formula set out for the assessment of PIAWE in Cl 2 of Schedule 3 of the 1987 Act should be applied, namely a calculation based on earnings during 52 weeks immediately before the date of injury. In this matter, the first respondent submits that in the 52 weeks immediately prior to the proceedings the applicant made $8,000 in earnings and therefore his prima facie PIAWE is $153.84 per week (being $8,000 divided by 52 weeks).
However, as Mr Stockley noted in his primary submissions, the applicant is entitled to the benefit of the operation of Cl 8B of Workers Compensation Regulations 2016 (the 2016 Regulations) to exclude the period prior to 20 September 2021 from the calculation.
Applying that mathematical exercise, the first respondent submits that the PIAWE would be calculated by reference to the earnings of $8,000 over a period of 22 weeks and two days, being $363.63 per week.
For the second respondent, Ms Compton submitted the correct PIAWE calculation as for the period being from 20 September 2021 to the last date the applicant worked, which the second respondent says was 25 February 2022, a period of 159 days or 22 weeks and 5 days. Applying that calculation, the second respondent asserts a PIAWE of $352.22 per week.
For the applicant, Mr McEnaney submitted the approach adopted by the respondents was inappropriate, as it would mean the applicant effectively worked full-time hours during the course of his tenure as a deemed worker with the respondent at a rate which would equate to approximately $10 per hour, or less than the national minimum wage.
Mr McEnaney noted the applicant's evidence was he agreed to work with the respondent on a weekly income of $1,000 per week. The applicant's evidence was the first respondent failed to pay him frequently, and that upon complaint by him it then sought to reframe his engagement by asking him to provide tax invoices for hours worked. That contention was not seriously challenged by either of the respondents in their submissions save for Mr Stockley noting the first respondent was a start up, and everyone who worked there accordingly accepted they would only be paid as and when funds became available. In any event, given the concession concerning the applicant being a deemed worker of the first respondent, in my view it is not strictly necessary for a finding as to the nature of the relationship between the applicant and first respondent to be made.
Having examined the statement evidence of the applicant and that of the first respondent's lay witnesses, where there is a discrepancy as to the terms and amounts of payment, I am minded to accept the applicant. There is no corroborative evidence to support the first respondent’s witnesses that they required the applicant to issue invoices to them.
Mr McEnaney submitted the legislative framework provides a pathway under Regulation 8C of the 2016 Regulations for adjustments of the earning period to align “the relevant earning period with any regular interval at which the worker is entitled to receive payment of earnings for work performed in the employment.” With respect, I accept that submission.
There is no realistic challenge to the applicant's evidence that he was first paid by the first respondent on 9 December 2021 in the sum of $1,000. He then received further payments of $1,000 on 15 December 2021, 21 December 2021, 4 January 2022, 13 January 2022 and 25 February 2022. Additionally, on 14 February 2022, the applicant received a payment for $2,000. There is no question the total amount received by the applicant from the first respondent was $8,000.
I accept the applicant's evidence regarding the difficulty which he was having being paid, examples of which are found at page 146 of the Application where the applicant was texting officers of the respondent requesting wages be transferred to his account, to which the respondent's officer replied “We will do another one... Did you receive the first one?”
Mr McEnaney submitted, and I accept, the obvious inference to draw from the message from the respondent's officer is the respondent accepted they owed money to the applicant, and that “the first one” had been paid, with an intention to pay another amount.
Each of the respondents accepts the applicant worked from 20 September 2021 until 23 February 2022, and that the applicant was only paid $8,000. The applicant's case is that the first respondent ought to have paid him $22,000 during that period, that is $1,000 per week. As Mr McEnaney noted, of the 22 weeks the applicant worked for the respondent, there were 14 during which he worked on a full-time basis for them but did not receive any earnings. I accept Mr McEnaney’s submission that the most reasonable manner in which to calculate the applicant's PIAWE in accordance with the statutory framework is to note that no earnings were received prior to 9 December 2021 and to apply Cl 8C, noting there was a “financially material change” which came about in December 2021, namely the applicant actually began to be paid for work which he had carried out.
I also accept Mr McEnaney’s submission that the first respondent, having failed to give evidence as to why it paid the applicant in amounts of $1,000 on and from 19 December 2021, should not be permitted to benefit from an inference that the payment made on 9 December 2021 was for work done in and from September 2021.
In my view, Regulation 8C of the 2016 Regulations provides the applicant with the benefit of a material change in his financial circumstances. It provides:
“(1) The relevant earning period for a worker is to be adjusted in accordance with this course if, during the unadjusted earning period, there was a change of an ongoing nature to the employment arrangement resulting in a financially material change to the earnings of the worker (for example, a change from full-time to part-time work).”
As indicated, in my view the material change in this matter was the applicant being paid on and from 9 December 2021.
In any event, in my view the applicant also gains the benefit of Regulation 8D of the 2016 Regulation. That clause provides:
“(1) The relevant earning period for a worker in employment may be adjusted to align the relevant earning period with any regular interval at which the worker is entitled to receive payment of earnings for work performed in the employment.”
In this matter the regular interval at which the worker was paid was weekly between 9 December 2021 and 25 February 2022, for which period he was paid $8,000.
In my view, the adjusted earnings period pursuant to either Regulation 8C or 8D should run from 9 December 2021 to 23 February 2022 being a period of 11 weeks, and therefore a PIAWE of $727.27 per week would apply.
Regulation 8C has been the subject of decision by Senior Member Bilby in Sidhu v Secretary (Department of Communities and Justice) in which the Senior Member said at [21]-[22]:
“21 After considering the submissions, I find that 8C does provide some assistance with the applicant. I find that there has been a change of an ongoing nature to the employment arrangement resulting in a financial material change to the earnings of the worker. That is, there has been a material change as the worker has changed from receiving Workers Compensation payments to ordinary earnings. The ongoing nature of this change is that after the first 9 weeks the method of payment has changed and has continued so that the worker is no longer paid Workers Compensation payments (at 95% of his salary) but he is paid normal ordinary earnings by his employer.
“22 The words financial material change, to my mind mean that there can be a change in the amount the worker is paid, and/or additionally there can be a change in the method and type of payment. In the circumstances of this case, bearing in mind the beneficial intent of the legislation, the worker has shown that there is a change in an ongoing nature to the employment arrangement. That is that the worker is receiving payment from his employer as opposed to the Workers Compensation insurer (or in the present matter, as opposed to receiving no income). The financial material change to the earnings of the worker is that he is now receiving his salary from his employer, whereas he was not receiving his salary from his employer for those first 9 weeks of the 52-week calculation. In addition to those 9 weeks payment, the applicant would have only received 95% of his salary not 100%.”
Analogous to the reasoning of Senior Member Bilby was the reasoning of Member Wynyard in Mitchell v Secretary (Department of Communities and Justice) [2022] NSWPIC 625. In that matter, Member Wynyard noted Senior Member Bilby’s findings and reasoning in Sidhu, and regarded himself primarily bound to give a beneficial construction to the relevant provisions of the 1987 Acts relating to the PIAWE calculation, reasoning:
“It is highly unlikely that the intention of the policymakers was to include a period when injured workers were not earning their gross pre-injury earnings…”
In reply, Mr Stockley submitted that all of the available evidence made it clear that the first respondent was in no position to fund a salary of any amount, let alone $52,000 per annum and that all the participants in the enterprise were prepared to on “live on scraps” until such time as the company had a revenue stream and a capacity to remunerate.
With respect, I do not agree with that submission. Rather, I prefer the evidence of the applicant and note the contemporaneous documentation which supports in my view his contention, namely that he was to be paid $1,000 per week on a regular basis, and I reject the evidence of the applicant's witnesses contrary to that effect.

SUMMARY

For the above reasons, the Commission will make findings and order set out on Page 1 of the Certificate of Determination.

[2023] NSWPIC 284

16 June 2023