Mitwari v Allianz Australia Insurance Limited

CERTIFICATE OF DETERMINATION OF MERIT REVIEWER
CITATION:	Mitwari v Allianz Australia Insurance Limited [2023] NSWPICMR 43
CLAIMANT:	Hussein Mitwari
INSURER:	Allianz Australia Insurance Limited
MERIT REVIEWER:	Katherine Ruschen
DATE OF DECISION:	15 August 2023
CATCHWORDS:	MOTOR ACCIDENTS - Motor Accident Injuries Act 2017; dispute about whether the insurer is entitled to refuse payment of statutory benefits where workers compensation may be payable under section 3.35; whether reasonable grounds to consider workers compensation is or may be payable; failure to comply with insurer’s request to make a workers compensation claim; whether it is necessary for it to be reasonable in the circumstances to require the claimant to make a workers compensation claim; employer not insured for workers compensation; where claim would be against the Nominal Insurer; where claimant or their company may be exposed to liabilities under the Workers Compensation Act 1987, sections 140, 145 and 155; Held – the reviewable decision is affirmed.
DETERMINATIONS MADE:	CERTIFICATE Issued under s 7.13(4) of the Motor Accident Injuries Act2017 DETERMINATION The reviewable decision is about whether the insurer is entitled to refuse payment of statutory benefits in accordance with s 3.35 (no statutory benefits if workers compensation payable) of the Motor Accident Injuries Act 2017 (the MAI Act), and is therefore a merit review matter under Schedule 2(1)(s) of the MAI Act. 1. The determination is as follows: (a) the reviewable decision is affirmed, and (b) the claimant is entitled to legal costs up to a maximum of 16 monetary units for reasonable and necessary legal costs incurred in connection with this merit review pursuant to s 8.10(3) of the MAI Act and Schedule 1, cl 1 of the Motor Accident Injuries Regulation 2017 (the Regulation).

STATEMENT OF REASONS

INTRODUCTION

There is a dispute between Hussein Mitwari (the claimant) and the insurer about whether the insurer is entitled to refuse payment of statutory benefits in accordance with s 3.35 of the Motor Accident Injuries Act 2017 (MAI Act) where workers compensation may be payable.

The claimant was involved in a motor accident on 14 January 2022.
On 16 August 2022 the claimant lodged an application for personal injury benefits.
On 18 November 2023 the insurer determined they were entitled to refuse payment of statutory benefits under s 3.35 of the MAI Act.
On 12 May 2023 the claimant requested an internal review of the insurer’s
18 November 2023 decision.
On 23 May 2023 the insurer issued their internal review decision affirming their decision of 18 November 2023 that the insurer is entitled to refuse payment of statutory benefits pursuant to s 3.35.
The claimant has applied for a merit review of the insurer’s internal review decision dated 23 May 2023.

SUBMISSIONS

There is no dispute that the circumstances of the motor accident amount to a workplace accident occurring during the course of the claimant’s employment for the purpose of the Workers Compensation Act 1987 (the WC Act).
The motor accident occurred during the course of the claimant’s employment as a working director of a registered company, HJK Platinum One Build Pty Limited (the Company). The claimant concedes in the circumstances he is entitled to make a workers compensation claim in relation to injuries sustained in the motor accident under the WC Act but says it would be unreasonable to require him to do so because:
(a) the Company did not have workers compensation insurance and accordingly, a workers compensation claim would be against the Nominal Insurer;
(b) as director of the Company, the claimant is exposed to a claim under the WC Act for reimbursement of workers compensation monies paid to him by the Nominal Insurer under the WC Act;
(c) as director of the Company, the claimant is exposed to prosecution under s 155 of the WC Act, and
(d) the claimant would therefore derive no benefit from making a workers compensation claim against the Nominal Insurer.
The insurer submits the claimant is not exempt from the operation of s 3.35 of the MAI Act merely because the claimant does not have a financial incentive to make a claim under the WC Act.

REASONS
Issues

There does not appear to be any dispute that:
(a) the circumstances of the motor accident entitle the claimant to make a claim for workers compensation under the WC Act;
(b) the insurer has requested that the claimant make a claim under the WC Act, and
(c) the claimant has not made a claim under the WC Act.
The dispute is limited to whether it is reasonable of the insurer to require the claimant to make a claim under the WC Act in circumstances where the claimant says, as director of the Company, he may be financially penalised under the WC Act because the Company is in breach of their legal obligation to maintain workers compensation insurance.

Legislation

Division 3.5 of the MAI Act prescribes restrictions and limitations on statutory benefits, including under s 3.35 which relevantly provides:
“3.35 No statutory benefits if workers compensation payable
(1) An injured person is not entitled to statutory benefits under this Part if compensation under the Workers Compensation Act 1987 ("workers compensation") is payable to the injured person in respect of the injury concerned (or would be payable if the liability for workers compensation had not been commuted).
(2) The relevant insurer for a claim for statutory benefits under this Part is not entitled to refuse payment of statutory benefits under this Part on the grounds that workers compensation is payable in respect of the injury unless--
(a) the injured person has made a successful claim for workers compensation in respect of the injury, or
(b) the injured person has failed to comply with a request by the relevant insurer under this section to make a claim for workers compensation in respect of the injury.
(3) …
(4) If the relevant insurer for a claim for statutory benefits under this Part considers on reasonable grounds that workers compensation is or may be payable in respect of the injury concerned, the insurer may require the injured person to make a claim for workers compensation in respect of the injury.
(5) ...”
There does not appear to be any dispute that there are reasonable grounds for the insurer to consider that workers compensation is or may be payable in respect of the subject injury. This much is conceded in the claimant’s submissions where he states he agrees in theory he can make a workers compensation claim and that such claim would be against the Nominal Insurer because the Company is uninsured for workers compensation. Given the circumstances of the motor accident (and noting this concession by the claimant) it must be concluded that there are reasonable grounds for the insurer to consider that workers compensation is or may be payable in respect of the injury concerned. Accordingly, under s 3.35(4) of the MAI Act the insurer is entitled to require the claimant to make a workers compensation claim in respect of the injury.
The insurer has requested that the claimant make a workers compensation claim. The claimant has not complied with this request and has not made a workers compensation claim. Accordingly, pursuant to s 3.35(2)(b) of the MAI Act the insurer is entitled to refuse payment of statutory benefits under Part 3 of the MAI Act by reason that the claimant has failed to comply with the insurer’s request that the claimant make a workers compensation claim.
As noted, the claimant concedes that in the circumstances the Company ought to have had worker’s compensation insurance but did not have it. Accordingly, Part 4, Division 6 of the WC Act arises.
The claimant was a working director of the Company at the time of the motor accident and is therefore considered to be an employee of the Company. Despite the fact the Company did not have workers compensation insurance the clamant is entitled to make a workers compensation claim under s 140 of the MAI Act which relevantly provides:
“140 Persons eligible to make claims
(1) A claim under this Division may be made against the Nominal Insurer by any person who considers he or she has a claim against an employer for compensation under this Act or work injury damages in respect of an injury to a worker, if--
(a) the employer is uninsured, or
(b) …
(2) An employer is considered to be "uninsured" if the employer--
(a) had not obtained, or was not maintaining in force, a policy of insurance for the full amount of the employer's liability under this Act in respect of the injured worker at the relevant time, or
(b) …
(2A) ...
(2B) ...
(3) If a payment is made by the Nominal Insurer in respect of a claim under this Division and the employer is subsequently identified, the Nominal Insurer may recover the amount paid from the employer or the employer's insurer in the manner provided by this Division.
(4) ...”
The claimant concedes he is an eligible person under s 140 of the WC Act and therefore may make a workers compensation claim against the Nominal Insurer. The claimant is concerned, however, about his liability to reimburse the Nominal Insurer for payments of compensation paid to the claimant under s 145 of the WC Act which relevantly provides:
“145 Employer or insurer to reimburse Insurance Fund
(1) The Nominal Insurer may serve on a person who, in the opinion of the Nominal Insurer, was--
(a) in respect of an injured worker to or in respect of whom a payment has been made by the Nominal Insurer in respect of a claim under this Division, an employer at the relevant time, or
(b) an insurer under this Act of such an employer,
a notice requiring that person, within a period specified in the notice, to reimburse the Insurance Fund an amount (not being an amount exceeding the amount of the payment made) specified in the notice.
(2) The Nominal Insurer may, by instrument in writing, waive the liability of an employer under subsection (1) to reimburse the Insurance Fund an amount, if the Nominal Insurer, in respect of the amount, is satisfied that--
(a) the amount is beyond the capacity of the employer to pay,
(b) the employer could not reasonably have been expected to regard himself or herself as an employer at the relevant time,
(c) the employer, not being a corporation, is bankrupt and the liability under this section is not provable in the bankruptcy,
(d) the employer, being a corporation, is being wound up and the liability under this section is not provable in the winding up,
(e) the employer, being a corporation, has been dissolved, or
(f) it would not be commercially feasible for the Nominal Insurer to attempt to recover the amount.
(3) …”
The claimant is also concerned about his liability under s 155 of the WC Act, which relevantly provides:
“155 Compulsory insurance for employers
(1) An employer (other than a self-insurer) shall obtain from a licensed insurer, and maintain in force, a policy of insurance that complies with this Division for the full amount of the employer's liability under this Act in respect of all workers employed by the employer and for an unlimited amount in respect of the employer's liability independently of this Act (but not including a liability for compensation in the nature of workers compensation arising under any Act or other law of another State, a Territory or the Commonwealth or a liability arising under the law of another country) for any injury to any such worker.
: Maximum penalty--500 penalty units or imprisonment for 6 months, or both.
(1AA) ...”

Consideration

The claimant submits it is unreasonable to require him to make a workers compensation claim against the Nominal Insurer in circumstances where he may be exposed to financial detriment if required to repay the Nominal Insurer pursuant to
s 145 of the WC Act and/or prosecution under s 155 of the WC Act.
Section 3.35 of the MAI Act, however, does not import into it any test of reasonableness other than whether there are reasonable grounds to consider workers compensation is or may be payable.
There is nothing in the language of s 3.35 that permits an objective test as to whether it is reasonable in the particular circumstances of a claimant to require that claimant to make a workers compensation claim. Section 3.35 requires that there be reasonable grounds for the insurer to consider workers compensation is or may be payable, but that is a separate and different consideration to whether it is reasonable to then require the claimant to make the claim. Once there are reasonable grounds to consider workers compensation is or may be payable s 3.35 applies, regardless of whether the requirement to make a workers compensation claim may cause detriment having regard to the claimant’s circumstances.
Section 3.35 does not contain any exemptions based on a claimant’s circumstances. If it were the intention of the legislation that it be reasonable to require the claimant to make a workers compensation claim presumably the section would have been drafted to include that objective test. If it were the intention of the legislation to exempt certain circumstances from the consequences of s 3.35 presumably the section would have provisioned for categories of persons that are exempt. If the intent of the legislation were to exempt persons such as the claimant who did not ensure the Company complied with other laws, the effect of the MAI Act would be to condone the unlawful conduct (through the claimant) of the Company. It cannot be the intention of the MAI Act to condone breaches of the WC Act by excusing persons such as the claimant from the operation of s 3.35.
Once there are reasonable grounds to consider workers compensation is or may be payable the insurer is entitled to require the claimant to make a workers compensation claim regardless of the claimant’s specific circumstances. There is nothing in s 3.35 that requires the insurer to determine whether it is reasonable to require the claimant to make a workers compensation claim. As the insurer puts it, there is nothing in s 3.35 (or elsewhere in the MAI Act or Regulation) that would have the effect of exempting the claimant from the operation of s 3.35 because he may be exposed to potential liabilities under the WC Act if he makes a workers compensation claim.
It is not necessary for me to consider the claimant’s particular circumstances in connection with ss 145 and 155 of the WC Act given there is no flexibility under the MAI Act to avoid s 3.35 because it might be unreasonable for a claimant to make a workers compensation claim. However, something should be said about the claimant’s approach to mandatory legislation. The claimant submits it is not reasonable for him to make a workers compensation claim in circumstances where he may derive no benefit from doing so and becomes exposed to a prosecution under s 155 of the WC Act. This demonstrates a lack of insight regarding the Company’s legal obligations and a lack of any acknowledgement that the Company is in breach of their legal obligations under the WC Act. Instead, the claimant expects to obtain benefit under the MAI Act from the Company’s breach of the WC Act.
The claimant as the controlling mind of the Company omitted to arrange workers compensation insurance despite the legal obligation to do so. The Company (and in turn the claimant) has benefited from this to date by saving on workers compensation insurance premiums for however long the breach of the WC Act has persisted. The Company (and in turn the claimant) has obtained a financial advantage as a result of their failure to comply with the law. The claimant expects the unlawful conduct and the financial advantage as a result to be ignored by other legislation. The claimant expects to obtain statutory benefits under the MAI Act without penalty for breach of the WC Act, including in circumstances where the Company retains financial benefit derived from the failure to pay insurance premiums. I do not accept the claimant or Company is to be excused in circumstances of unlawful conduct of the Company. In any event, for the reasons set out above the wording of s 3.35 does not permit the claimant to be excused from the operation of s 3.35.
As director and therefore controlling mind of the Company, the claimant made certain business decisions in conducting the affairs of the Company. This included ignoring the legal obligation to maintain workers compensation insurance. The claimant has made their bed and must lie in it. The claimant has chosen to do a particular thing and must now accept the unpleasant or detrimental results of their action.
In so far as s 145 of the WC Act is concerned, the Nominal Insurer “may” serve on the Company a notice requiring the Company to reimburse the Insurance Fund an amount not exceeding the amount of payments made to the claimant. Accordingly, whilst the wording of s 3.35 does not exempt or excuse the claimant from the operation of s 3.35 recovery by the Nominal Insurer is discretionary and the Nominal Insurer may waive the liability of an employer to reimburse the Insurance Fund if satisfied of one or more matters outlined in s 145 of the WC Act. This includes, among other things, if the amount repayable is beyond the capacity of the Company to pay. Accordingly, the Company may not be required to repay the Nominal Insurer in any event.
Further, pursuant to s 1.5.1 of the Corporations Act 2001 (Cth) the Company, being a registered corporation, is a “separate legal existence that is distinct from that of its owners, managers, operators, employees and agents. A company has its own property, its own rights and its own obligations”. Section 145 requires the “employer” to repay the Nominal Insurer. The employer in this case is the Company, not the claimant. Accordingly, the claimant’s contention he is personally exposed to liabilities under the WC Act is misconceived, as it is the Company that is exposed. The Company and the claimant are separate legal persons, and the MAI Act is not concerned with the financial position the Company may be put in, if the claimant makes a workers compensation claim.
There may be a basis upon which the claimant could be held personally accountable for the Company’s breach of the WC Act. However, I have not been provided with any submissions on this. The claimant has not pointed to any legislative provisions under which the claimant may be personally exposed to a liability in relation to the Company’s breach of the WC Act. In any event, for the reasons set out above, regardless of whether the claimant is personally exposed to a liability there is nothing in the wording of s 3.35 that exempts him from the operation of that section. Whether it is the Company or the claimant that is exposed to liabilities under the WC Act the claimant has made their bed and must now lie in it.
Section 155 of the WC Act also concerns the Company’s legal obligations as distinct from the claimant’s obligations. The Company, not the claimant, is exposed to penalty under s 155. Further, to the extent the claimant submits he (or more correctly, the Company) is exposed to prosecution under s 155 if he were to make a workers compensation claim that submission is also misconceived. This is because s 155 does not state the Company is only required to maintain workers compensation insurance if a claim is made. Nor does s 155 state the Company will only be exposed to prosecution or penalty if a claim is made. Under s 155 the Company is at risk of prosecution/penalty for a breach of that section regardless of whether the claimant makes a workers compensation claim. Accordingly, this is a risk that has always existed for the Company regardless and is not a risk that would only materialise if the claimant made a workers compensation claim, as contended by the claimant. It may be that by not making a workers compensation claim the claimant is able to conceal the Company’s breach of s 155 of the WC Act. That is what the claimant is attempting to do by challenging the insurer’s decision under s 3.35 on grounds of reasonableness. Such concealment cannot be condoned in any legal forum, including the Personal Injury Commission. Nor should it be condoned generally.

If s 3.35 of the MAI Act were to permit an objective consideration as to whether it is reasonable to require the claimant to make a workers compensation claim the following circumstances would be relevant:
(a) the Company’s obligation to maintain workers compensation insurance is a mandatory obligation required by law;
(b) the Company, not the claimant, is exposed to liabilities under the WC Act;
(c) whilst the Company is at risk of being required to repay the Nominal Insurer, whether it is required to do so is not known, as the Company’s liability may be waived by the Nominal Insurer under s 145 of the WC Act;
(d) the Company is at risk of penalty/prosecution for breach of s 155 of the WC Act regardless of whether the claimant makes a workers compensation claim, and
(e) the Company (and in turn the claimant) has gained financially from not paying compulsory workers compensation insurance premiums.
Where there is no evidence that the claimant is personally exposed to liability under the WC Act and in any event, the Company’s obligations are mandatory at law and the Company (and in turn the claimant) has financially benefited from not paying workers compensation premiums I do not think it is unreasonable to require the claimant to make a workers compensation claim. Accordingly, even if s 3.35 were to require objective consideration as to whether it is reasonable to require the claimant to make a workers compensation claim I would conclude that it is reasonable in the circumstances. What is unreasonable is the claimant’s expectation that no consequences should flow from the Company’s breach of the WC Act.
Objectively, I do not consider the position under s 3.35 to be unfair to the claimant. If a person does not comply with their legal obligations, even if it is because of ignorance, it is fair that there are or may be consequences. The claimant may hold a subjective view that s 3.35 produces an unfairness to him. However, as stated by Harrison AsJ in Allianz Insurance Australia Limited v Shahmiri [2022] NSWSC 481 at paragraph 70 “… one cannot construe an Act to accommodate a particular circumstance, no matter how unfair that circumstance may be”. This is the case even if objectively the claimant’s circumstances were considered to produce an unfairness under s 3.35.

COSTS

Pursuant to Schedule 1, cl 2(b) of the Regulation this is a regulated merit review matter. Accordingly, pursuant to s 8.10(3) of the MAI Act and Schedule 1, cl 1 of the Regulation, the claimant is entitled to legal costs incurred in connection with this merit review to the extent such costs are reasonable and necessary, up to a maximum of 16 monetary units.

CONCLUSION

For the reasons set out above I conclude:
(a)   there are reasonable grounds for the insurer to consider workers compensation is or may be payable to the claimant in respect of the subject injury;
(b)   the insurer is therefore entitled to require the claimant to make a workers compensation claim and has done so;
(c)   as the claimant has failed to comply with the insurer’s request to make a workers compensation claim the insurer is entitled to refuse payment of statutory benefits;
(d) the claimant is not exempt from the operation of s 3.35 because there may be detriment to him or the Company arising from the Company’s breach of s 155 of the WC Act, if the claimant makes a workers compensation claim, and
(e) even if s 3.35 were to permit (which it does not) an assessment of whether it is reasonable in the claimant’s circumstances to require the claimant to make a workers compensation claim (an objective test) I have concluded that it is reasonable to require the claimant to make a workers compensation claim.
Accordingly:
(a) the reviewable decision is affirmed, and
(b) the claimant is entitled to regulated legal costs up to a maximum of 16 monetary units for reasonable and necessary legal costs incurred in connection with this merit review pursuant to s 8.10(3) of the MAI Act and Schedule 1, cl 1 of the Regulation.

LEGISLATION AND GUIDELINES

In making this decision, I have considered the following:
· the application, reply and supporting documentation;
· the MAI Act;

· the Guidelines,
· the Regulation; and
· the WC Act.

[2023] NSWPICMR 43

15 August 2023