NRMA v Sciortino

[2021] NSWPIC 419

DECISION OF PRESIDENT’S DELEGATE
CITATION:	NRMA v Sciortino [2021] NSWPIC 419
CLAIMANT:	Joseph Sciortino
INSURER:	NRMA
PRESIDENT’S DELEGATE:	Jeremy Lum
DATE OF DECISION:	18 October 2021
CATCHWORDS:	MOTOR ACCIDENTS - Application for review of merit review decision; President's gatekeeper decision under section 7.15 of the Motor Accidents Injuries Act 2017 (MAI Act); calculation of pre-accident weekly earnings (PAWE); application of clauses 3(1), 3(2) and 3(3) of the MAI Act; Held – reasonable cause to suspect merit review was incorrect in a material respect; review application is accepted; matter to be referred to a Merit Review Panel.
DETERMINATION MADE:	I am satisfied that there is reasonable cause to suspect that the merit review was incorrect in a material respect.  Accordingly, the review application is accepted and will be referred to a Merit Review Panel.

BACKGROUND

1. Joseph Sciortino (the claimant) was injured in a motor accident on 27 February 2021.

1. On 30 July 2021, Merit Reviewer Delfendahl (the Merit Reviewer) found that the insurer's reviewable decision with respect to the calculation of the claimant’s statutory weekly benefits is to be varied. 

1. Details of the variation is contained in the ‘Determination’ section of the Certificate (top of page 2) and not reproduced here.

1. NRMA (the applicant) seeks to have the assessment of the Merit Reviewer reviewed on the basis that it was incorrect in a material respect.  They rely on the particulars set out in the application and supporting documentation. 

1. Joseph Sciortino (the respondent) was provided with an opportunity to lodge a reply however no reply is available to me on the Commission Portal.  It therefore appears the respondent did not lodge a reply. 

1. Section 7.15 of the Motor Accident Injuries Act2017 (the MAI Act) provides that if the President’s Delegate is satisfied that there is reasonable cause to suspect that the decision determining the review was incorrect in a material respect, the review application will be referred to a Merit Review Panel.

SUBMISSIONS AND REASONS

1. The applicant submits that the Merit Reviewer adopted a myopic approach, accounting for both personal exertion income derived from work as a shop fitter and carpenter and rental income derived.  It is submitted only the work as a shop fitter and carpenter should be taken into account in the calculation of the claimant’s pre-accident weekly earnings (PAWE).

1. The applicant refers to clause 3(1) of schedule 1 of the MAI Act which provides that “loss of earnings” means “a loss incurred or likely to be incurred in a person’s income from personal exertion”.

1. The applicant says that clause 3(2) defines what is “personal exertion” income and clause 3(3) defines what “personal exertion” income is not. 

1. The applicant submits that various forms of passive income, including rental income, are included in clause 3(3) and therefore may not be considered when assessing an injured person’s PAWE.  It is submitted the Merit Reviewer considered rental income which “artificially increased the PAWE calculation and resulted in a material error”.

1. I note there is no dispute the claimant was the only wage earner for the family trust.

1. At paragraphs 40-43, the Merit Reviewer stated:

   “The earnings of the claimant’s company and family trust consist of sales and rents received.  It appears that the claimant is the only worker in the company and that the income from sales is derived from his personal exertions.  The trust also receives rental income although from what source is not known.  The wages paid by the trust to the claimant come from a combination of the sales and the rental income.”

1. And further at paragraphs 53-56, the Merit Reviewer stated:

   “In my view, the claimant’s PAWE should be based upon wages paid to him by the trust.  Whether that income was through the sales or rents received it was received by the trust, not the claimant, and the claimant was paid a wage from that.  Like any business, earnings come from a number of sources and wages paid from those the gross earnings of the business.  In those circumstances, it is my opinion that the claimant should be treated as a wage earner despite the fact that he appears to be the ‘sole’ wage earner of his family trust.”

1. The Merit Reviewer found that the earnings of the company (or trust) “consist of sales and rents received” (my emphasis).  It was then found only the income from sales was derived from the claimant’s personal exertions.  The Merit Reviewer did not know the source of the rental income.

1. I acknowledge that the Merit Reviewer clearly examined the information that was before him, including referring to the trust’s BAS that showed the claimant was paid a wage of $78,500 in the 2020 financial year. A “wage” as defined in the MAI Act would of course be included as income derived from the claimant’s personal exertions.

1. However, the applicant has referred to the High Court decision of Husher v Husher [1999] HCA 47 which suggests the claimant’s PAWE should only be calculated on that portion of the company (or trust) earnings that is under the control of the claimant. Or, in other words, as a direct result of the fruits of his labour.

1. Without knowing the source of the rental income but nevertheless including it in the calculation of the claimant’s PAWE could be interpreted as the Merit Reviewer including income that was not derived from the claimant’s personal exertions.  I may be wrong and that it is of no consequence how may sources of income the trust receives, provided it is accepted that the claimant was paid a wage by the trust.  There is, however, enough from the applicant’s submissions to create a sense of unease, or reasonable cause to suspect that the PAWE calculation is incorrect in a material respect.

CONCLUSION

1. The review application is therefore accepted and will be referred to a Merit Review Panel.

1. In making this decision, I have considered the following:

   ·        the application and supporting documentation,

   ·        the certificate including the reasons issued by Merit Reviewer Delfendahl, the application for assessment, the response and all the documents provided prior to the assessment, and

   · the MAI Act.

Jeremy Lum

Delegate of the President

Personal Injury Commission