Prendergast v QBE Insurance (Australia) Limited
[2024] NSWPICMR 15
•10 July 2024
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| CITATION: | Prendergast v QBE Insurance (Australia) Limited [2024] NSWPICMR 15 |
| CLAIMANT: | Brad James Prendergast |
| INSURER: | QBE Insurance (Australia) Limited |
| MERIT REVIEWER: | Katherine Ruschen |
| DATE OF DECISION: | 10 July 2024 |
| CATCHWORDS: | MOTOR ACCIDENTS - Motor Accident Injuries Act 2017; dispute about payment of weekly benefits under division 3.3; meaning of pre-accident weekly earnings (PAWE); schedule 1 clause 4(1) and (2)(a1); whether weekly payments of statutory benefits are earnings received as an earner for the purpose of PAWE under any of clause 4; Held – the reviewable decision set aside. |
| DETERMINATIONS MADE: | CERTIFICATE Issued under s 7.13(4) of the Motor Accident Injuries Act2017 DETERMINATION 1. The reviewable decision is: (a) set aside, and (b) the claimant’s pre-accident weekly earnings (PAWE) is $703.89. |
STATEMENT OF REASONS
INTRODUCTION
There is a dispute between Brad James Prendergast (the claimant) and the insurer 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).
The claimant was involved in a prior motor accident on 8 March 2022 (first accident), which was the subject of a separate application for personal injury benefits to another insurer, GIO.
On 10 August 2023 the claimant was involved in the motor accident that is the subject of the application for personal injury benefits that gives rise to this merit review.
At the time of the motor accident on 10 August 2023 (subject accident) the claimant was in receipt of weekly payment of statutory benefits from GIO on the basis of a total loss of earnings as a result of the first accident.
On 18 April 2024 QBE, the insurer in respect of the subject accident and respondent to this merit review, determined the claimant’s pre-accident weekly earnings (PAWE) to be nil and as a result, the claimant is not entitled to payment of weekly statutory benefits because he did not suffer a loss of earnings as a result of the subject accident.
The claimant requested an internal review of the insurer’s decision dated 18 April 2024.
On 2 May 2024 the insurer issued their internal review decision in which the insurer affirmed their decision that the claimant’s PAWE is nil and therefore, there is no loss of earnings as a result of the subject accident.
The claimant has requested a merit review of the insurer’s internal review decision dated 2 May 2024 (the Application).
A preliminary conference was held with the parties on 14 June 2024 during which it as discussed that the insurer appears to have conflated two issues – the first being the claimant’s PAWE amount and the second being whether there has been a loss of earnings as a result of the subject accident.
At present, the insurer has concluded that as (in the insurer’s view) PAWE is nil there can be no subsequent loss of earnings as a result of the subject accident (because there were no pre-injury earnings). It was agreed with the parties in the preliminary conference that the issue for consideration in this merit review will be limited to the question of the claimant’s PAWE amount. If the outcome of this merit review is that the insurer’s decision that PAWE is nil is set aside and PAWE is determined in a higher amount, the insurer’s current reasoning there is no loss of earnings because PAWE is nil will not have weight. Accordingly, if the outcome of this merit review is that the claimant’s PAWE is greater than nil it was agreed with the parties that the insurer will then need to reconsider the question of whether there is any loss of earnings in order to determine whether the claimant is entitled to payment of weekly benefits under s 3.7 of the MAI Act.
Both parties were given an opportunity to provide further submissions and/or documents by way of directions issued after the preliminary conference. Both parties subsequently confirmed they did not wish to provide any further submissions or documents.
SUBMISSIONS
The claimant submits his PAWE calculation falls under Sch 1, cl 4(2)(a1) of the MAI Act on the basis he did not receive any earnings during the 12 month period before the day of the motor accident but had received earnings for at least 26 weeks of the first year of the two year period before the accident. The claimant submits that his only income during the 12 months before the accident was weekly payment of statutory benefits paid by GIO in respect of the first accident and that as this is passive income, it is not “earnings” for the purpose of the MAI Act. The claimant submits “earnings” is to be given the same meaning in cl 4(2)(a1), as given by the insurer in cl 4(1).
The insurer submits the claimant’s PAWE falls under Sch 1, cl 4(1) because during the 12 months before the subject accident the claimant was in receipt of income from GIO and that whilst this is passive income, it is a “source of earnings” for the purpose of cl 4(2)(a1). The insurer submits that as there was a source of earnings in the 12 months before the accident, cl 4(2)(a1) does not apply. The insurer then contends, for the purpose of cl 4(1), the GIO income is excluded from PAWE as it is passive income, not active income and as the claimant did not receive any other earnings in the 12 months before the accident his PAWE under cl 4(1) is nil.
REASONS
Issues
The issues in dispute are:
(a) whether the claimant’s PAWE calculation falls under Schedule 1, cl 4(1) or cl 4(2)(a1), and
(b) calculation of the claimant’s PAWE under the applicable subclause in cl 4.
Weekly payment of statutory benefits by GIO
The first question is whether weekly benefits paid by GIO in respect of the first accident, before the subject accident, are considered part of PAWE for the purpose of the MAI Act.
The insurer’s position seems to be that such payments are included for the purpose of considering PAWE under cl 4(2)(a1) but excluded from PAWE under cl 4(1). However, this position is fundamentally flawed. This is because a fundamental principle of statutory interpretation is that the MAI Act is to be construed as a whole. As the High Court said in Project Blue Sky v Australian Broadcasting Authority (S41-1997) [1998] HCA 28 (Project Blue Sky) (at [69]):
“The primary object of statutory construction is to construe the relevant provision so that it is consistent with the language and purpose of all the provisions of the statute. The meaning of the provision must be determined by reference to the language of the instrument viewed as a whole. In Commissioner for Railways (NSW) v Agalianos, Dixon CJ pointed out that "the context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed". Thus, the process of construction must always begin by examining the context of the provision that is being construed.”
The principles of statutory interpretation, as set out by the High Court in Project Blue Sky relevantly require that:
(a) the words in the statute must be interpreted in a way that is consistent with the language used in that statute;
(b) words of a statutory provision are given the meaning that the legislature is taken to have intended them to have, and
(c) the same wording used throughout the statute carries the same meaning.
Accordingly, the insurer cannot give one meaning to the word “earnings” for the purpose of cl 4(1) and a different meaning for the purpose of cl 4(2)(a1). The MAI Act does not include a definition of “earnings” but principles of statutory interpretation require that the word is to be given the same meaning throughout the MAI Act.
Both cl 4(1) and cl 4(2)(a1) concern the “gross earnings received by the earner as an earner” in during a specified period.
“Gross earnings” is not defined in the MAI Act. As noted, the word “earnings” is also not defined. However, “loss of earnings” is defined in Schedule 1, cl 3(1) of the MAI Act to mean “a loss incurred or likely to be incurred in a person's income from personal exertion”. It is clear from this definition that the word “earnings” is intended to mean “income from personal exertion”.
The meaning of “income from personal exertion” is contained in cl 3(2) as follows:
“A person's ‘income from personal exertion’ is--
(a) the amount that is the income of the person consisting of earnings, salaries, wages, commissions, fees, bonuses, pensions, retiring allowances and retiring gratuities, allowances and gratuities received in the capacity of employee or in relation to any services rendered, and
(b) the proceeds of any business carried on by the person either alone or in partnership with any other person, and
(c) any amount received as bounty or subsidy in carrying on a business.”
Whilst the word “earnings” does not have a specified definition in isolation to the definition of the phrase “loss of earnings” it is a word that is used throughout the MAI Act. Pursuant to principles of statutory interpretation it must be taken to have the same meaning throughout the MAI Act. Accordingly, “earnings” should be given the same meaning given by the definition of “loss of earnings” in Schedule 1, cl 3 of the MAI Act when used in phrases such as “gross earnings” “earnings as an earner” and, relevant to this merit review, “pre-accident weekly earnings”.
Under cl 3 “loss of earnings” means a loss of “income from personal exertion”. It follows that the word “earnings” is intended to mean “income from personal exertion” wherever the word appears in the MAI Act, including throughout Schedule 1, cl 4.
It is clear from the definition of “loss of earnings” from which a definition of “earnings” can be derived, being “income from personal exertion” that there is a distinction in the MAI Act between passive and active income. Passive income is excluded from the consistent meaning to be given to the word “earnings” wherever it appears in the MAI Act that is, “earnings” means “income from personal exertion” as provided for in the definition of “loss of earnings”. Accordingly, only active income counts as earnings, being income from “personal exertion” through employment or self-employment.
The claimant is not an employee of GIO. He did not receive the GIO payments for any services rendered. He did not receive the GIO payments from carrying on a business. The GIO payments are passive income, which falls outside the meaning of earnings based on principles of statutory interpretation which can only lead to the conclusion that “earnings” means “income from personal exertion”.
I understand the claimant does not dispute that the weekly payments made by GIO are not earnings for the purpose of the MAI Act. What is disputed is the insurer’s contention that earnings under cl 4(1) include GIO payments but not under cl 4(2)(a1). As the principles of statutory interpretation require the word “earnings” to be given the same meaning throughout the MAI Act, I agree with the claimant that the insurer’s position is flawed.
Clause 4(1) and cl 4(2)(a1) both concern the question of pre-accident weekly “earnings”. Nothing in the wording of either clause suggests there should be a departure from the definition of “earnings” elsewhere in the MAI Act or that there is a distinction as to what is considered “earnings” under cl 4(1) and what is considered “earnings” under cl 4(2)(a1). Whilst cl 4(2)(a1) requires consideration as to whether the claimant received “earnings from any source at any other time during the pre-accident period” it only refers to “earnings” from any source and not income generally, which may include active and passive income”. The phrase “earnings from any source” is not defined in the MAI Act. The word “earnings” in that phrase must be taken to have the same meaning as it is given elsewhere in the MAI Act being, in short, active income earned from employment or self-employment.
Accordingly, by reason of the consistent definition to be given to “earnings” throughout the MAI Act, the GIO payments which are passive income and not income derived from personal exertion are excluded from an assessment of PAWE under both cl 4(1) and cl 4(2)(a1).
Does cl 4(2)(a1) apply?
It is correct that if the claimant’s PAWE is assessed under cl 4(1) his PAWE is nil as he did not receive any “earnings” in the 12-month period before the day of the subject accident. However, cl 4(1) only applies if cl 4(2) does not apply.
The claimant submits cl 4(2)(a1) applies, which provides that "pre-accident weekly earnings" means:
“(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”
The claimant submits cl 4(2)(a1) applies because:
(a) he did not receive any earnings that is, active income from employment or self-employment in the 12 months before the subject accident, and
(b) however, he was employed during a period or periods equal to at least 26 weeks during the first year of the pre-accident period.
Under Schedule 1 cl 4(2A) the "pre-accident period" for the purpose of cl 4(2)(a1)“is the period of 2 years immediately preceding the motor accident”.
The subject accident occurred on 10 August 2023. Accordingly, the pre-accident period is 10 August 2021 to 9 August 2023. For cl 4(2)(a1) to apply the claimant:
(a) must have received earnings from employment or self-employment for at least 26 weeks in the first year of this two year period that is, in the period 10 August 2021 to 9 August 2022, and
(b) must not have received any earnings at any other time during this two year period that is, he must not have received earnings in the period
10 August 2022 to 9 August 2023.There does not appear to be any dispute that the claimant did not receive any “earnings” that is, active income in the 12 month period before the subject accident from 10 August 2022 to 9 August 2023. On the evidence before me there are no earnings in this period (I have concluded above that GIO payments in this period are not “earnings” for the purpose of cl 4(2)(a1)).
In respect of the first year of the two year period before the subject accident from
10 August 2021 to 9 August 2022 the evidence establishes the claimant received earnings from 10 August 2021 to 16 March 2022. The claimant stated during the preliminary conference that he was rendered totally incapacitated for his pre-accident employment as a result of the first accident and has remained so to date. GIO has made weekly payment of statutory benefits on the basis the claimant suffered a total loss of earnings as a result of the first accident.The period in the first year of the two year pre-accident period when the claimant was in receipt of earnings is equal to 26 weeks. Accordingly, I am satisfied on the evidence before me that the claimant received earnings during a period or period equal to at least 26 weeks in the first year of the two year pre-accident period and did not receive earnings from any other source at any other time. I am therefore satisfied that cl 4(2)(a1) applies to calculation of the claimant’s PAWE.
What is the claimant’s PAWE under cl 4(2)(a1)?
Whilst the claimant did not receive earnings for the full year of the first year of the two year pre-accident period, cl 4(2)(a1) requires the claimant’s PAWE to be averaged over the full first year of the ore-accident period that is, over 52 weeks.
The claimant has provided payslips which show in the period 10 August 2021 to
9 August 2022 he received earnings, as an employee of MAAS Group, in a 26 week period from 20 September 2021 to 16 March 2022.The payslips show gross earnings from MAAS Group in the first year of the two year pre-accident period in the sum of $36,602.52. This equates to a weekly average during the first year (52 weeks) of the two year pre-accident period that is, a weekly average during the period 10 August 2021 to 9 August 2022 of $703.89.
The claimant’s PAWE is therefore $703.89.
CONCLUSION
For the reasons set out above:
(a) GIO payments are excluded from consideration of PAWE under both cl 4(1) and cl 4(2)(a1), including for the purpose of considering if there have been earnings from any other source under cl 4(2)(a1);
(b) the claimant’s PAWE falls for assessment under cl 4(2)(a1), and
(c) under cl 4(2)(a1) the claimant’s PAWE is $703.89.
Accordingly:
(a) the reviewable decision is set aside, and
(b) the claimant’s PAWE amount is $703.89.
As noted above, the insurer reasoned that the claimant has not suffered a loss of earnings as a result of the subject accident because his PAWE is nil. During the preliminary conference the claimant stated he remains totally incapacitated for his pre-accident employment as a result of injuries sustained in the first accident. As the insurer’s nil PAWE decision is set aside, if the claimant presses a claim for weekly benefits, the insurer is to re-determine whether there has been a loss of earnings as a result of injury in the subject accident and not from another cause (for example, ongoing loss of earnings as a result of injury in the first accident) for the purpose of determining whether there is any entitlement to weekly benefits under s 3.7 from or after 5 March 2024[1] (the date on which GIO weekly payments ceased).
[1] It is understood from the teleconference that the claimant accepts he did not suffer a loss of earnings as a result of the subject accident prior to 5 March 2024 because any loss of earnings prior to this date was the result of injury sustained in the first accident.
LEGISLATION AND GUIDELINES
In making this decision, I have considered the following:
· the Application, Reply and supporting documentation;
· MAI Act;
· Motor Accident Guidelines, and
· Motor Accident Injuries Regulation 2017.
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