Shams v Insurance Australia Limited t/as NRMA Insurance
[2023] NSWPICMR 53
•19 October 2023
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| CITATION: | Shams v Insurance Australia Limited t/as NRMA Insurance [2023] NSWPICMR 53 |
| CLAIMANT: | Shabnam Shams |
| INSURER: | NRMA |
| MERIT REVIEWER: | Katherine Ruschen |
| DATE OF DECISION: | 19 October 2023 |
| 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; clause 4(1) earnings received as an earner in the 12 months before the day of the accident; average over 52 weeks; no adjustment to accommodate fluctuation in earnings from casual employment; earnings received after the day of the motor accident excluded from PAWE; Held – the reviewable decision is set aside. |
| DETERMINATIONS MADE: | CERTIFICATE Issued under s 7.13(4) of the Motor Accident Injuries Act2017 DETERMINATION 1. The reviewable decision is set aside. 2. The claimant’s pre-accident weekly earnings (PAWE) amount is $184.29. |
STATEMENT OF REASONS
INTRODUCTION
There is a dispute between Shabnam Shams (the claimant) and the insurer about the amount of weekly payments of statutory benefits payable under Division 3.3 of the Motor Accident Injuries Act 2017 (the MAI Act).
The claimant was involved in a motor accident on 30 June 2023.
On 26 July 2023 the claimant made an application for personal injury benefits under the MAI Act.
On 18 August 2023 the insurer determined that the claimant’s pre-accident weekly earnings (PAWE) amount was $187.74.
On 21 September 2023 the claimant requested an internal review of the insurer’s PAWE decision of 18 August 2023.
On 4 September 2023 the insurer issued their internal review decision in which the insurer varied their PAWE decision to $189.85.
The claimant has made an application for a merit review of the insurer’s internal review decision dated 4 September 2023 (the Application).
SUBMISSIONS
The claimant is legally represented yet submissions are brief, providing limited insight into how the claimant says PAWE should be calculated. Without explaining what they say is the correct calculation or how it should be reached, the claimant’s solicitors simply submit on behalf of the claimant that:
(a) the insurer has incorrectly calculated PAWE (the submissions do not identify the alleged error by the insurer);
(b) PAWE should not have been calculated on “this basis” (understood to mean on the basis of Schedule 1, cl 4(1) but no evidence has been provided to suggest cl 4(2) might apply) and in doing so the insurer has “unfairly prejudiced the claimant”, and
(c) at the time of the accident the claimant was working part-time earning $300 to $500 per week based on varied hours each week.
Whilst neither is submitted by the claimant, I surmise that the claimant is considers their PAWE should be calculated based on the amount they were earning in the immediate weeks before the accident when the claimant respectively earned $297 and $379 in each of the two weeks prior to the accident or alternatively, by averaging gross earnings over only those weeks in which earnings were received in the 12 month pre-accident period, instead of over 52 weeks.
The insurer submits that whilst there were some weeks before the accident when the claimant earned $300 there were weeks when they earned less and weeks when they received no earnings, which is consistent with the nature of casual employment. The insurer submits cl 4(1) requires nonetheless, that the claimant’s earnings received during the 12 months before the accident be averaged over 52 weeks.
REASONS
Issues
There is no dispute that the claimant is an earner within the meaning in the MAI Act.
The issue is whether the claimant’s PAWE falls under Schedule 1, cl 4(1) of the MAI Act and the amount of the claimant’s PAWE whether under cl 4(1) or one of the exceptions in cl 4(2).
The legislation
Pursuant to Schedule 1, cl 4 of the MAI Act PAWE means:
“(1) ‘Pre-accident weekly earnings’, in relation to an earner who is injured as a result of a motor accident, means the weekly average of the gross earnings received by the earner as an earner during the 12 months immediately before the day on which the motor accident occurred, unless subclause (2) applies.
(2) In the following cases, ‘pre-accident weekly earnings’, in relation to an earner who is injured as a result of a motor accident, means--
(a) if, on the day of the motor accident, the earner was earning continuously, but had not been earning continuously for at least 12 months--the weekly average of the gross earnings received by the earner as an earner during the period from when the earner started to earn continuously to immediately before the day of the motor accident,
(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,
(b) if subclause (3) applies--the weekly average of the gross earnings the earner received as an earner, or could reasonably have been expected to receive, during the 12 months after the change of circumstance referred to in the subclause occurred,
(c) if the earner is an earner by reason of having entered into an arrangement with an employer or other person to undertake employment or to commence business as a self-employed person--the average weekly gross earnings that the earner could reasonably have been expected to earn, but for the injury, in employment under that arrangement.
(2A) The ‘pre-accident period’, in relation to a motor accident, is the period of 2 years immediately preceding the motor accident.
(3) This subclause applies if, during the 12 months immediately before the day of the motor accident, there was, as a result of any action taken by the earner, a significant change in his or her earnings circumstances that resulted in the earner regularly earning, or becoming entitled to earn, more on a weekly basis than he or she was earning before the change occurred.
…
(4) For the purposes of this clause, an earner earns continuously if he or she obtains earnings from permanent employment or from a source that, on the day of the motor accident, was likely to continue for a period of at least 6 months to provide earnings to the earner on the same, or a similar, basis to the basis on which the earnings were being provided as at that day.”
The evidence establishes the claimant was employed by McDonalds as a casual crew member throughout the 12 months before the motor accident. This evidence does not trigger any of the exceptions in cl 4(2). Nor is there any other evidence that might suggest one of the exceptions in cl 4(2) applies to the claimant’s circumstances. Accordingly, the claimant’s PAWE is to be calculated under Schedule 1, cl 4(1).
What is the claimant’s PAWE under cl 4(1)?
Under Schedule 1, cl 4(1) the claimant’s PAWE is the weekly average of the gross earnings received as an earner in the 12 month period before the day of the motor accident.
The motor accident occurred on 30 June 2023. Accordingly, under cl 4(1) the pre-accident period is 30 June 2022 to 29 June 2023.
Clause 4(1) provides that the claimant’s PAWE is “the weekly average of the gross earnings received by” the claimant in this 12 month period (emphasis added). Accordingly, only earnings actually “received” by the claimant in the period
30 June 2022 to 29 June 2023 are included in PAWE. Earnings received before or after this period are excluded, including earnings received after 29 June 2023, even if those earnings represent work carried out on or before 29 June 2023.
The claimant has provided payslips evidencing receipt of the following earnings from their casual employment as a crew member with McDonalds in the 12 months before the accident from 30 June 2022 to 29 June 2023:
Date earnings received by the claimant (date paid is shown on the pay slips)
Amount
Somewhere between 1 July 2022 and 1 August 2022
$656.02[1]
2 August 2022
$294.99
13 September 2022
$285.02
20 September 2022
$316.91
27 September 2022
$192.80
4 October 2022
$156.69
11 October 2022
$396.83
18 October 2022
$187.72
25 October 2022
$187.41
1 November 2022
$194,43
8 November 2022
$105.61
15 November 2022
$189.82
29 November 2022
$263,87
6 December 2022
$204.96
13 December 2022
$151.53
17 January 2023
$228.32
24 January 2023
$218.58
31 January 2023
$347.71
14 February 2023
$165.43
21 February 2023
$198.82
28 February 2023
$187.32
7 March 2023
$455.34
14 March 2023
$326.62
21 March 2023
$304.13
28 March 2023
$220.55
11 April 2023
$129.01
18 April 2023
$338.64
24 April 2023
$216.03
2 May 2023
$323.47
9 May 2023
$275.81
16 May 2023
$80.06
23 May 2023
$423.36
30 May 2023
$264,90
6 June 2023
$154.20
14 June 2023
$263.60
20 June 2023
$297.40
27 June 2023
$379.02
Total
$9,582.93
[1] I have not been provided with a payslip for this amount. However, the payslip for payment date 2 August 2022 records gross earnings for the corresponding pay period of $294.99 and gross financial year to date earnings (that is, from 1 July 2022) as of 2 August 2022 in the sum of $951.01 which is a difference of $656.02. Based on the year to date figure as of 2 August 2022 I accept the claimant received earnings of $656.02 in the period 1 July 2022 to 1 August 2022 and therefore within the 12 months before the accident.
The claimant next received earnings on 4 July 2023 in the sum of $578.31. Whilst at least some of these earnings represented work carried out on or before 29 June 2023 the earnings were received by the claimant after the 12 month period before the accident ended on 29 June 2023. As noted above, cl 4(1) only concerns earnings that were “received” by the claimant in the 12 months before the day of the accident and is not concerned with when the work was carried out. Accordingly, earnings received by the claimant on and after 4 July 2023 are excluded from PAWE.
The insurer has apportioned an amount of $289.16 from the earnings received on
4 July 2023 to work carried out on or before 29 June 2023 and included that sum in PAWE. However, this is an incorrect application of cl 4(1) as whilst the work may have been carried out on or before 29 June 2023 only earnings “received” by the claimant on or before 29 June 2023 can be included in PAWE under cl 4(1). The wording of cl 4(1) does not allow for any apportionment of earnings received after the accident to be included in PAWE because they represent work performed before the accident. I have therefore disregarded the sum of $289.16 of the earnings received 4 July 2023 in determining PAWE, as required by cl 4(1).
Accordingly, as set out in the above table total gross earnings received by the claimant in the 12 months before the motor accident that is, in the period 30 June 2022 to
29 June 2023 were $9,582.93. Clause 4(1) requires that this be averaged over the number of weeks in the 12 month period before the accident, which is 52 weeks. Accordingly, the claimant’s PAWE is $184.29.
Can the claimant’s PAWE be adjusted to reflect earnings in the immediate weeks before the accident or to exclude weeks where no earnings were received from the number of weeks over which the weekly average is taken?
Weekly earnings received by the claimant in the 12 months before the accident ranged from $80 to $455 at its highest[2]. There were a number of weeks where earnings are shown on payslips as nil. This is the nature of casual employment.
[2] Given the weekly pay cycle, in the absence of payslips for the first payment amount in the above table, I have assumed this sum was paid over 2 or more weeks in July 2022 and is not a single week’s earnings.
The claimant submits they were employed on a “part-time” basis. However, the payslips make clear that the claimant was employed on a casual basis and not on a part-time permanent basis. Casual employment has no guarantee of hours or work, as would otherwise be expected in the case of permanent part-time or full-time employment. It is clear the claimant’s earnings fluctuated from week to week, consistent with the nature of casual employment. There were also periods of absence of employment resulting in nil earnings in some weeks. Regardless of whether this was because the employer did not have work available or because the claimant was unavailable, such is the nature of casual employment.
The MAI Act does not permit any adjustment to PAWE to account for the nature of casual employment or the fact that in the weeks immediately before the accident the claimant may have earned more in that employment than they typically earned in other weeks. Nor does the MAI Act permit the claimant’s PAWE to be calculated by averaging their gross earnings over only those weeks in the 52 weeks before the accident in which earnings were actually received. This is made clear in the Supreme Court decision in Allianz Insurance Australia Limited v Shahmiri [2022] NSWSC (Shahmiri).
Schedule 1, cl 4(1) is clear in its terms that the claimant’s PAWE must be taken as the weekly average over the 52 week pre-accident period. Once the claimant’s PAWE falls under cl 4(1) it must be averaged over 52 weeks regardless of whether earnings were received in each of the 52 weeks and regardless of whether in some weeks earnings were higher than others.
There are no provisions under the MAI Act, Motor Accident Injuries Regulation (the Regulation) or the Motor Accident Guidelines (the Guidelines) that permit adjustment of PAWE to account for interruption to earnings in the 12 months before the accident (in this case, the interruption being the fluctuating nature of casual employment). The reasons for this are set out by Harrison AsJ in Shahmiri. In Shahmiri Harrison AsJ held that pursuant to Schedule 1, cl 4(1) PAWE is to be “calculated by taking … earnings over the whole of the 12-month period immediately before the day of the accident and dividing it by 52 reflecting the number of weeks during the whole 12-month period” and that the MAI does not allow any adjustment to this by reason of any break or reduction in employment or earnings during the 12 month pre-accident period.
Accordingly, the claimant’s PAWE cannot be adjusted under cl 4(1) to account for weeks when they received no earnings or weeks when earnings were higher than others. To do so would be inconsistent with the objects of the MAI Act.
Section 1.3 sets out the objects of the MAI Act, which relevantly include:
(a) benefiting all members of the motoring public by keeping the overall costs of the scheme within reasonable bounds so as to keep premiums affordable, and
(b) promoting the recovery and return to work or other activities of those injured in motor accidents.
Section 1.3(4) requires a construction of the MAI Act that would promote the objects of the MAI Act to be preferred to a construction that would not promote those objects. The second reading speech for the Motor Accident Injury Bill noted the reasons for insurers being able to regularly assess a person’s earning capacity under the MAI Act as being “to ensure that injured people who have the capacity to return to employment stay off work only as long as is necessary to support their recovery”. Adjusting a person’s PAWE to reflect only those weeks they earned before the accident or those weeks in which they had a higher income would be a distortion of the person’s true average weekly earnings before the accident and would provide little incentive for that person to return to work. It is therefore inconsistent with the objects of the MAI Act.
The claimant complains in submissions that taking the weekly average over 52 weeks under cl 4(1) has “unfairly prejudiced the claimant”. However, it is difficult to see how this is the case in the circumstances of the claimant’s fluctuation in earnings from week to week due to casual employment. There are a number of weeks in the pre-accident period where the claimant’s earnings were below the amount of their PAWE and contrary to the claimant’s submissions, the claimant did not receive earnings of $500 or more in any week before the accident. Nor did the claimant consistently receive earnings at or above $300 per week, as suggested in the claimant’s submissions. Accordingly, there does not appear to be any prejudice to the claimant arising from determination of their PAWE amount in the sum of $184.29.
If adjustment were made to overcome the claimant’s fluctuating earnings from casual employment the outcome would be likely to enrich the claimant. As noted, this in turn provides little incentive to return to work and is inconsistent with the objects and purpose of the MAI Act. If PAWE were adjusted under cl 4(1) to accommodate the claimant’s casual earnings so as to produce PAWE between $300 and $500 as contended by the claimant, the claimant would in turn potentially receive weekly benefits in an amount greater than her expected average weekly earnings in the same employment after the accident.
Whilst I do not see any unfairness or prejudice to the claimant in circumstances of pre-accident earnings based on casual employment, to the extent the claimant perceives an unfairness as stated by Harrison AsJ in Shahmiri at [70], “one cannot construe an Act to accommodate a particular circumstance, no matter how unfair that circumstance may be”.
Accordingly, the claimant’s PAWE is the weekly average of their gross earnings averaged over the whole of the 52 week period before the motor accident.
CONCLUSION
For the reasons set out above:
(a) the claimant’s PAWE falls under Schedule 1, cl 4(1) of the MAI Act;
(b) clause 4(1) requires that the claimant’s PAWE be calculated based on the weekly average over the whole of the 52 week period, regardless of whether there were weeks when no earnings were received or whether the claimant enjoyed higher earnings in the weeks immediately before the accident than they typically earned in other weeks;
(c) the earnings received after the end of the 12 months before the day of the accident that is, after 29 June 2023 are exclude from PAWE under cl 4(1) even if the earnings represent work carried out on or before 29 June 2023;
(d) the evidence establishes the claimant received gross earnings in the sum of $9,582.93 in the 12 month period before the accident from 30 June 2022 to 29 June 2023, and
(e) the claimant’s PAWE is therefore $184.29 ($9,582.93 divided by 52 weeks).
Accordingly:
(a) the reviewable decision is set aside, and
(b) the claimant’s PAWE amount is $184.29.
LEGISLATION AND GUIDELINES
In making this decision, I have considered the following:
· the Application, Reply and supporting documentation;
· MAI Act;
· The Guidelines, and
· the Regulation 2017.
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