Sehion v Maximum Energy

CERTIFICATE OF DETERMINATION OF MEMBER
CITATION:	Sehion v Maximum Energy [2022] NSWPIC 405
APPLICANT:	Joshua Sehion
RESPONDENT:	Maximum Energy Systems Pty Ltd
MEMBER:	Rachel Homan
DATE OF DECISION:	22 July 2022
CATCHWORDS:	WORKERS COMPENSATION - Claim for weekly compensation at a higher rate than that being paid; calculation of pre-injury average weekly earnings (PIAWE) for a short-term worker; Held — orders made for payment at a higher PIAWE rate.
DETERMINATIONS MADE:	The Commission determines: 1. The applicant’s pre-injury average weekly earnings (PIAWE) rate is $1,000. The Commission orders: 1. The respondent to pay weekly compensation pursuant to ss 36 and 37 of the Workers Compensation Act 1987, from 28 June 2021 to date and continuing based on a PIAWE of $1,000, as periodically indexed. 2. The respondent to have credit for payments already made.

STATEMENT OF REASONS

BACKGROUND

Mr Joshua Sehion (the applicant) was employed as a casual labourer by Maximum Energy (the respondent) when, on 28 June 2021, he fell from the roof of a garage sustaining injury. Liability for the injury is not in dispute.
On 17 December 2021, the applicant’s solicitor wrote to the insurer requesting internal review of the insurer’s calculation of pre-injury average weekly earnings (PIAWE). It was claimed that as the applicant had been employed by the respondent for less than four weeks at the time of injury on 28 June 2021, his PIAWE should be calculated in accordance with his projected earnings pursuant to cl 4 of Schedule 3 to the Workers Compensation Act 1987 (the 1987 Act). A PIAWE figure of $1,608.17 was claimed.
On 30 December 2021, the insurer wrote to the applicant advising that a decision had been made to increase the applicant’s PIAWE from $300 to $425.
The current proceedings were commenced by an Application to Resolve a Dispute (ARD) lodged in the Personal Injury Commission (the Commission) on 10 February 2022. The applicant seeks weekly compensation from 28 June 2021 at a higher rate than that which has been paid.
The applicant also sought compensation pursuant to s 60 of the 1987 Act for medicinal cannabis treatment recommended by Dr Michael Kale. That claim was the subject of a separate Certificate of Determination issued on 12 May 2022.

PROCEDURE BEFORE THE COMMISSION

The parties appeared for conciliation conference and arbitration hearing on 9 May 2022. The applicant was represented by Mr Bruce McManamey of counsel, instructed by Ms Sarah King. The respondent was represented by Mr Fraser Doak of counsel, instructed by Mr Nicholas Totaro. A representative from the insurer was also present.
During the conciliation conference, Mr McManamey indicated that the applicant would seek to argue that in addition to cl 4 of Schedule 3 to the 1987 Act, cl 2 of Schedule 3 remained relevant to the calculation of PIAWE. Relying on evidence of earnings for work performed for the applicant’s own company, Processing Property Management Pty Ltd, in the 52 weeks prior to injury, the applicant submitted that a PIAWE higher than $1,608.17 would apply.
Mr Doak submitted that the respondent was taken by surprise by the applicant’s submission as to the correct approach to the calculation of PIAWE and sought leave to issue a Direction for Production on Processing Property Management Pty Ltd as well as an extension of time to serve a Notice for Production on the applicant for his financial records. The respondent’s applications were opposed by the applicant but after hearing submissions from both parties, which were recorded, a determination was made to grant leave to the respondent to issue the Direction for Production and extend time for a Notice for Production to be served.
A timetable for written submissions and any amended wages schedules to be lodged and served was established. The parties were informed of the Commission’s intention to determine the liability dispute in relation to the claim for weekly compensation at the conclusion of that timetable.
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.

ISSUES FOR DETERMINATION

This determination deals only with the following issue:
(a) the proper calculation of the applicant’s PIAWE.

EVIDENCE

Documentary evidence

The following documents were in evidence before the Commission and considered in making this determination:
(a)    ARD and attached documents;
(b)    Reply and attached documents;
(c)    documents attached to an Application to Admit Late Documents lodged by the applicant on 25 March 2022;
(d)    the report of Dr Priyanga Arachchi, dated 18 December 2021, lodged by the respondent on 2 May 2022;
(e)    documents attached to an Application to Admit Late Documents lodged by the respondent on 3 June 2022;
(f)    written submissions lodged on behalf of the applicant on 7 June 2022;
(g)    written submissions lodged on behalf of the respondent on 20 June 2022, and
(h)    written submissions in reply lodged on behalf of the applicant on 28 June 2022.
Neither party applied to adduce oral evidence or cross-examine any witness.

FINDINGS AND REASONS

Section 33 of the 1987 Act provides that if total or partial incapacity for work results from an injury, the compensation payable by the employer shall include a weekly payment during the incapacity.
The evidence indicates that the applicant has been receiving weekly compensation pursuant to ss 36(1) and 37(1) of the 1987 Act since the date of injury on the basis that he has no current work capacity. In these proceedings, the applicant seeks weekly compensation from that date and continuing at a higher rate. Specifically, the applicant claims that the relevant PIAWE figure is higher than that which has been determined by the insurer.
Clause 2 of Schedule 3 of the 1987 Act, defines “pre-injury average weekly earnings” as:
“(1)    Pre-injury average weekly earnings, in relation to an injured worker, means the weekly average of the gross pre-injury earnings received by the worker for work in any employment in which the worker was engaged at the time of the injury.
Note—
See also clauses 3–5 relating to modifications of pre-injury average weekly earnings by agreement and in relation to apprentices, trainees and persons aged under 21 years.
(2)     Except as provided by this clause (or by regulations made under this clause), in calculating the pre-injury earnings received by a worker in employment for the purposes of subclause (1), no regard is to be had to earnings in the employment paid or payable to the worker for work performed before or after the period of 52 weeks ending immediately before the date of the injury (the relevant earning period).
(3)     The regulations may provide for the adjustment of the relevant earning period for a worker in employment (including, for example, by extending or reducing the period)—
(a) to take into account any period of unpaid leave or other change in earnings circumstances in the employment, or
(b) 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.
(4)     If the amount of a worker’s pre-injury average weekly earnings is less than any minimum amount prescribed by the regulations as applicable to the worker, the amount of the worker’s pre-injury average weekly earnings is taken to be that minimum amount. Different minimum amounts may be prescribed for different classes of workers, including part-time and full-time workers.”
In the case of short-term workers, cl 4 of Sch 3 provides:
“4   Pre-injury average weekly earnings for short-term workers
(1)    If, at the time of the injury, the injured worker had been continuously employed in employment for less than 4 weeks, the pre-injury average weekly earnings in relation to the worker may be calculated having regard to the weekly average of the earnings that the worker could reasonably have been expected to have earned in the employment, but for the injury, during the period of 52 weeks after the injury.
(2)     The regulations may make provision for the matters to be taken into account for the purposes of determining the earnings that the worker could reasonably have been expected to have earned in the employment, but for the injury, during the period of 52 weeks after the injury.”
For the purposes of cl 4, cl 8F of the Workers Compensation Regulation 2016 provides:
“8F   Pre-injury average weekly earnings for short-term workers—Schedule 3, clause 4(2) of 1987 Act
(1) In determining the earnings that a worker could reasonably have been expected to have earned in employment for the purposes of clause 4(1) of Schedule 3 to the 1987 Act, the following matters are to be taken into account—
(a)  any contract of employment made before the date of the injury,
(b)  any award or agreement relating to the employment,
(c)  any hours worked or earnings received by the worker during the period of 52 weeks before the injury.
(2)    If the consideration of those matters does not reasonably assist in determining the earnings that the worker could reasonably have been expected to have earned in the employment, the earnings are to be determined by having regard to the average weekly amount earned during the period of 52 weeks before the injury by other persons for the performance of similar work as the worker (whether or not with the worker’s employer).”
It is common ground between the parties that the applicant was employed by the respondent for less than four weeks at the time of the injury and that the applicable legislation for determining the applicant’s PIAWE is as set out above. The parties differ, however, as to how that legislation should be applied in the applicant’s circumstances.
The parties also agree that the applicant worked the following hours prior to and on 28 June 2021:
23 June 2021 – 8 hours;
24 June 2021 – 3 hours;
25 June 2021 – did not work;
26 June 2021 – 4 hours, and
28 June 2021 – 2 hours.
The applicant was paid at the rate of $25 per hour. Based on the actual hours worked for the respondent and the hourly rate paid prior to injury, the insurer determined on 30 December 2021 that the applicant’s PIAWE was $425 per week.
In his statement dated 19 August 2021, the applicant stated that he was offered employment with the respondent by his landlord, Mr Yialkin Shevket. The applicant did not sign a contract but had a verbal agreement with Mr Shevket. The agreement was that if work was available, Mr Shevket would call or text message the applicant. It was never specified how many hours per week the applicant would work. The applicant anticipated that he would likely work full-time hours.
In a supplementary statement dated, 3 February 2022, the applicant stated that although he started out working on a casual basis at the rate of $25 per hour, he expected his hourly rate would increase after September 2021. The applicant anticipated that he would be performing a minimum of 40 hours per week. The applicant stated:
“When Shevy offered me the position he indicated he had a lot of work coming, hence he required the extra help. I recall him saying words to the effect of, ‘I have 50 houses to get through as well as 15 Units coming up in December’ and ‘I hope you like hard work.’. I recall replying to Shevy with words to the effect of, ‘I don’t mind hard work. I will bring my swag out and sleep onsite if I have to’. On that basis, I anticipated I would be working in excess of 40-hours per week.
Furthermore, I was due to complete my Diploma in Construction Management at the end of September 2021. It was my understanding that upon completion of my Diploma, my hourly rate would be increased, although we did not discuss the particulars of the pay rise. I had no concerns leaving things open-ended and relying on the verbal contract established between myself and my employer as I trusted Shevy and had a relationship with him outside our business relationship. As such, there was no formal contract recording my hours or rate of pay, and my roster was communicated to me via text messages, phone calls and face to face conversations.”
The applicant stated that if he had not been injured, he would have been earning upwards of $1,000 per week not including contract labour work in his own business, “Process and Property Management Pty Ltd” or money made scrapping cars.
A written statement was also provided by Mr Shevket on 17 August 2021. In that statement, Mr Shevket stated that he got approval to build a house on a vacant block at Jilliby, NSW. The applicant was not working so he asked the applicant if he wanted work as a labourer. The applicant was not a qualified tradesman. The applicant did not sign a formal written contract and worked two to eight hours per day. The applicant was paid $25 per hour and had worked 17 hours prior to the injury.
In the written submissions lodged in these proceedings, the respondent alleged that, based on the actual hours worked and hourly earnings in employment with the respondent, the applicant’s gross average weekly earnings were $468.75.
The respondent submitted that greater weight would be given to the actual hours worked for the respondent and the actual hourly rate than the speculative evidence given by the applicant about his expectations of the f hours he would be given by the respondent. Although the applicant “expected” or “anticipated” that his hourly rate would increase and he would be performing a minimum of 40 hours per week, no objective evidence had been provided to support the applicant’s claim by reference to any contractual agreement or evidence of discussions with the employer. Mr Shevket’s evidence that he had approval to build “a house” suggested that the available work for the applicant was limited.
The fact that the respondent possibly had more work coming up did not mean that the hours of work offered to the applicant would have been different to those prior to the date of injury. In the absence of reliable evidence about the likely hours of work in the period of 52 weeks after the date of injury, the respondent submitted that greater weight would be given to the actual hours worked and earnings received by the applicant in the period of 52 weeks before the injury.
The applicant submits that his evidence that he expected to work for a minimum of 40 hours per week was not contradicted by Mr Shevket’s evidence.
The applicant submitted that it was relevant that he earned $83,623 or equivalent to $1,608.13 per week in the 52 weeks immediately prior to the injury. The applicant submitted that there was no reason to expect that the applicant would not have earned similar money in the weeks after the injury, if he had been fit.
The difficulty with the applicant’s submission is that there is no documentary evidence confirming the applicant’s earnings in the 52 weeks immediately prior to the injury. The applicant has provided bank statements and invoices that confirm earnings in contract work in May and June 2021 totalling approximately $9,290, as well as earnings in contract work in December 2019 and January 2020 totalling approximately $7,177.
Neither the resume nor the employment history set out in the applicant’s written statement, suggests any other employment or contract work in the 52 weeks prior to 28 June 2021. The bank statements in evidence suggest that the applicant was in receipt of JobSeeker payments during the period of 52 weeks prior to injury.
The applicant has given written evidence that he was experiencing financial hardship at the time he was offered the job with the respondent due to a lack of work as a result of the COVID lockdown.
This evidence suggests that the submission that the applicant earned $83,623 in the 52 weeks prior to injury may not be accurate. The evidence further suggests that the hours worked and earnings received by the applicant during that period of 52 weeks does not necessarily assist in determining what the applicant could reasonably have expected to earn in the employment but for injury, given the unusual impact of the COVID lockdown.
The evidence indicates that the applicant did not have a written contract of employment with the respondent. The applicant and Mr Shevket have given consistent evidence indicating that the applicant was employed on a casual basis for “up to” 40 hours per week. Both have given evidence that the applicant’s hourly rate was $25 per hour.
Mr Shevket does not corroborate the applicant’s evidence that he expected that his hourly rate would increase in September 2021. The applicant’s claim in this regard appears to be based on the applicant’s speculation that he would be able to earn a higher hourly rate upon completion of a Diploma in Construction Management. The applicant conceded, however, that he had not actually discussed particulars of any pay rise with Mr Shevket.
The notice issued by the insurer on 30 December 2021 records that the current minimum award rate for a ‘labourer’ was $23.22.
Clause 8F(2) provides that if consideration of the matters listed in sub-cl (1) does not reasonably assist in determining the earnings that the worker could reasonably have been expected to have earned in the employment, the earnings are to be determined by having regard to the average weekly amount earned during the period of 52 weeks before the injury by other persons for the performance of similar work as the worker.
The legislative framework for determining PIAWE in the case of a short time worker gives the Commission a degree of flexibility and discretion in determining what is an appropriate figure in all the circumstances.
Considering the evidence as described above, I am not satisfied that the actual earnings and hours worked in employment in the 52 weeks before the injury provides an accurate basis for determining the earnings that the applicant could reasonably have been expected to have earned but for the injury.
The applicant was employed by the respondent for less than one week and his earnings in his business in May and June 2021 were not consistent with his earnings in the remainder of the 52-week period. The applicant’s earnings in that 52-week period were, however, distorted by the effect of the COVID lockdown.
There is no evidence of any agreement or contract with regard to the hours of work the applicant would be offered other than the evidence that it would be “up to 40 hours”.
In these circumstances, I am satisfied that the most reliable basis for determining the earnings the applicant could reasonably have been expected to have earned lies in the evidence of the applicant and Mr Shevket that the applicant could have expected to earn $25 per hour for up to 40 hours per week. This rate is slightly higher than the minimum award rate for a labourer.
Although the pattern of work with the respondent prior to the date of injury did not suggest that the applicant was on track to work 40 hours in his first week of employment, I am prepared to accept, having regard to the nature of the work that the applicant’s hours may have fluctuated.
In all the circumstances, I am satisfied that a PIAWE rate of $1,000, reflecting 40 hours per week at $25 per hour, is the best estimate of what the applicant could reasonably have been expected to have earned in the employment, but for the injury, in the 52 weeks after the injury.
That figure is subject to periodic indexation in accordance with s 82A of the 1987 Act.
There will be an award for the applicant for weekly compensation pursuant to ss 36 and 37 of the 1987 Act, from 28 June 2021 to date and continuing based on a PIAWE of $1,000, as periodically indexed.

CaseChat Overview and Summary

Orders of the court

Background to the litigation

Evidence Before The Court

Reasons for decision

Legal Principle Established