Thomas v Insurance Australia Limited t/as NRMA Insurance
[2023] NSWPICMR 24
•14 April 2023
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| Citation: | Thomas v Insurance Australia Limited t/as NRMA Insurance [2023] NSWPICMR 24 |
| ClaimanT: | Philip Elwyn Thomas |
| Insurer: | Insurance Australia Limited t/as NRMA Insurance on behalf of the Nominal Defendant |
| Merit Reviewer: | Brett Williams |
| DATE OF DECISION: | 14 April 2023 |
| CATCHWORDS: | MOTOR ACCIDENTS - Motor Accident Injuries Act 2017; merit review; determination of pre-accident weekly earnings (PAWE) under Schedule 1, clause 4; where claimant had not been earning continuously for 12 months before the accident; insurer argued that PAWE should be determined in accordance with Schedule 1, clause 4(2)(a); whether Schedule 1, clause 4(3) applied; Held – the examples provided in the note to Schedule 1, clause 4(3) are non-exhaustive; the examples all involve circumstances in which an earner has been earning; none of the examples involve circumstances where an earner goes from earning nothing to earning something; the term ‘earnings circumstances’, as used in Schedule 1, clause 4(3) refers to circumstances involving an earner who is earning at the time the change in circumstances occurs; if the earner is not earning, there are no ‘earnings circumstances’, and the subclause does not apply; for there to be ‘earnings circumstances’ there must be earnings; PAWE determined under Schedule 1, clause 4(2)(a); Held – reviewable decision set aside; matter remitted to insurer. |
| Determinations made: | CERTIFICATE OF DETERMINATION 1. The reviewable decision dated 27 October 2022 is set aside. 2. Mr Thomas’ pre-accident weekly earnings are determined to be $180.19 3. The matter is remitted to the insurer to determine Mr Thomas’ entitlements under Part 3 Division 3.3 of the Motor Accident Injuries Act 2017. |
STATEMENT OF REASONS
BACKGROUND
Philip Thomas was involved in a motor accident on Bells Line of Road on 15 July 2022 (accident). Following the accident, he made a claim for statutory benefits under the Motor Accident Injuries Act 2017 (the MAI Act) on the Nominal Defendant. Insurance Australia Limited t/as NRMA Insurance (insurer) acts on behalf of the Nominal Defendant.
A dispute has arisen between Mr Thomas and the insurer about the amount of weekly payments to which Mr Thomas is entitled under Division 3.3 of the MAI Act. Specifically, Mr Thomas disputes the insurer’s determination about his-pre accident weekly earnings (PAWE).
In this regard, on 27 October 2022 the insurer determined that Mr Thomas’ PAWE were $110.56. Mr Thomas sought an internal review of that decision. On 2 November 2022 the internal reviewer affirmed the insurer’s decision about Mr Thomas’ PAWE.
These proceedings were commenced by Mr Thomas on 22 November 2022. His dispute with the insurer is a merit review matter: Sch 2 cl 1(a) of the MAI Act.
PRELIMINARY CONFERENCES
At the preliminary conference held on 23 January 2023 I confirmed the dispute between the parties related to Mr Thomas’ PAWE. I explained to Mr Thomas that his entitlements under the MAI Act are governed by the provisions of that Act. The application of Sch 1 cl 4 was discussed, as PAWE is determined in accordance with that clause.
Mr Thomas told me that between July 2021 and November 2021 he only worked half a day in September 2021 and half a day in October 2021. He explained that he undertook limited work in December 2021. In January and February 2022 his work picked up, until it returned to normal in March 2022.
Mr Thomas explained that he did not consider the PAWE calculated by the insurer fairly reflected his earnings. He did not agree with PFK’s assessment of his PAWE.
The insurer was asked to consider the basis upon which it had determined Mr Thomas’ PAWE. Among other matters, the insurer was to consider whether Sch 1 cl 4(3) of the MAI Act applied to the claim.
I determined that further information about Mr Thomas’ earnings was required, and directed Mr Thomas to provide a schedule of earnings for the period July 2021 – July 2022.
The proceedings were listed for a further preliminary conference on 31 March 2023,
Mr Thomas having provided schedules of earnings as directed. The schedules contain all his earnings from both Airtasker and non-Airtasker sources for the week commencing 12 July 2021 to the week commencing 11 July 2022. This period encompasses the 12 months before the day of the accident.
Ms Panagiotonakos, confirmed that, other than with respect to the amounts recorded in the schedule that contains non-Airtasker earnings for the weeks commencing:
(a) 31 January 2022 ($605);
(b) 7 February 2022 ($495);
(c) 25 April 2022 ($649), and
(d) 9 May 2022 ($860)
the insurer does not dispute the accuracy of the schedules.
To be clear, the insurer only disputes the non-Airtasker earnings for the weeks set out at [11] (a)-(d) (disputed earnings). Those earnings are disputed on the basis that there is no documentary evidence supporting the earnings.
With respect to the disputed earnings, Mr Thomas explained that the amount for the week of 9 May 2022 was an error, in that it included a sum of $195 that is also recorded in the schedule of Airtasker earnings. The result is that the amount of non-Airtasker earnings for that week is $665. Mr Thomas agreed to provide the Commission with evidence in relation to the disputed earnings.
Mr Thomas also confirmed that the non-Airtasker earnings schedule omitted earnings for two weeks, namely $220 for the week commencing 9 July 2022 and $143 for the week commencing 14 July 2022. Ms Panagiotonakos confirmed that those earnings were not disputed by the insurer.
Ms Panagiotonakos confirmed that the insurer’s position is that Mr Thomas’ PAWE should be determined under Sch1 cl 4(2)(a) of the MAI Act, and that cl 4(3) does not apply on the facts of the claim. She also confirmed that the insurer agreed that:
(a) Mr Thomas is an “earner” as defined in Sch 1 cl 2;
(b) for the purposes of Sch 1 cl 4(2)(a), at the date of the accident Mr Thomas was earning continuously, and
(c) for the purposes of Sch 1 cl 4(2)(a) Mr Thomas had not been earning continuously for at least 12 months.
Ms Panagiotonakos confirmed that the insurer’s position is that Mr Thomas started to earn continuously before the day of the accident from the week of 6 December 2021. It was also agreed by the insurer that the period between 6 December 2021 and 11 July 2022 was 32 weeks.
Mr Thomas told me that his earnings prior to February 2022 were not reflective of his earnings prior to the COVID-19 lockdown, and that from February 2022 his earnings started to reflect his pre-lockdown earnings. He also told me that his earnings had been adversely affected by floods.
Ms Panagiotonakos submitted that the facts did not support a finding that PAWE should be determined in accordance with Sch 1 cl4(3). She referred me to the decision of Wannous v QBE Insurance (Australia) Limited [2023] NSWPICMR 11 (Wannous), in particular at [18] – [20], in support of this submission.
I informed the parties that once I had received evidence from Mr Thomas about his earnings during the disputed periods I intended to determine the dispute on the papers. There was no objection to me taking this course.
I told Mr Thomas that if he did not agree with my decision in relation to his PAWE he could seek a review of the decision by a merit review panel.
STATUTORY FRAMEWORK
Schedule 1 of the MAI Act contains definitions relating to earnings for the purposes of weekly payments of statutory benefits under Division 3.3. The Schedule includes definitions of ‘earner’, ‘loss of earnings’, and ‘pre-accident weekly earnings’.
Resolution of the dispute in these proceedings hinges on the definition of ‘pre-accident weekly earnings’, which is defined in Sch 1 cl 4 as follows:
“4 Meaning of ‘pre-accident weekly earnings’—general
(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.
Note—
Examples of a change of circumstances to which this subclause would apply include a change of job, a promotion, a move from part-time to full-time employment, or a pay increase arising from the achievement of performance standards.
(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.”
Whether or not a party agrees with the way in which ‘pre-accident weekly earnings’ is determined under the MAI Act, in any claim for weekly payments of statutory benefits under that Act, Sch 1 cl4 applies, and I must apply it when determining this dispute.
EVIDENCE
In his claim form dated 8 August 2022, Mr Thomas recorded that at the time of the accident he was self-employed as a landscape gardener earning “$500+ per week average”. The claim form also records that he was in receipt of a disability support pension.
The insurer relies on a report from PKF dated 20 October 2022. The PKF report includes financial records provided by Mr Thomas, as set out in the report. The report records that Mr Thomas did not derive income from self-employment for the period
July 2021 to October 2021. The report records that Mr Thomas received JobSaver payments over this period, and that he was also receiving government pension payments throughout the 52 weeks prior to the accident. Neither the JobSaver payments nor the pension payments were included in PKF’s assessment of PAWE on the basis that they did not relate to income derived from personal exertion.
As Mr Thomas did not derive income for the period 14 July 2021 to 26 October 2022, PKF based its assessment of PAWE on Sch1 cl 4(2)(a) of the MAI Act. The report records that PKF were unable to match all invoices provided by Mr Thomas with deposits in his bank records. The total value of bank deposits PKF assumed were related to business income was $7,187.
PKF based their assessment of income derived and expenses incurred on Mr Thomas’ 2022 tax return, noting that he did not derive income for the period July 2021 to October 2021. Adjustments were made in relation to the treatment of business expenses, as recorded at [4.11] in the report.
Based on the information provided to it, PKF determined that Mr Thomas’ PAWE were $110.56, an amount lower than the statutory minimum: ss 3.6(4) and 3.7(4) of the MAI Act.
The evidence also includes the earnings schedules provided by Mr Thomas and the material he has provided with respect to the disputed earnings. This evidence is discussed later in these reasons.
SUBMISSIONS
Mr Thomas’ submissions
In his application to the Commission, Mr Thomas recorded that his “income assessment is ridiculously flawed”. His argument, as I understand it, is that the PAWE calculated by the insurer does not fairly reflect his earnings at the time of the accident. He does not agree with PFK’s assessment of his PAWE.
In an email to the insurer seeking a review of its initial PAWE determination,
Mr Thomas stated as follows:
“I wish to appeal my income assessment because of period from July 1 2021 to Jan 28 2022 when NSW was in lockdown and I was being paid micro business grant by NSW Govt for period of lockdown.
It is my contention that either my income assessment should be calculated from February, in which case my income average is $320/week, or incl the micro business grant. My Previous tax years show average income of approx. $320/week …”
Insurer’s submissions
The insurer submits that Mr Thomas’ PAWE is $111.90 per week before tax (gross), being 2.5% of the maximum weekly amount.
The insurer argues that COVID-19 related government payments are not considered earnings by an injured person as an ‘earner’, and are therefore excluded when determining an injured person’s PAWE. Accordingly, it is argued that payments of that nature received by Mr Thomas are not included in his PAWE as they are not income derived from personal exertion. I accept this submission. While the term ‘earnings’ is not defined in the MAI Act, I find that it means earnings from personal exertion. The government Covid payments were not earnings received by Mr Thomas from personal exertion. They were not earnings received by him as an earner.
The insurer also submits that government pension payments received by Mr Thomas is not income derived by him from personal exertion and should not be included in the calculation of his PAWE. I agree; the pension payments were not earnings received by Mr Thomas arising from personal exertion. They were not earnings received by him as an earner.
The insurer argues that ‘gross earnings’ refers to the net profit earned by a self-employed claimant after all expenses of the business are accounted for, before tax. I agree that Mr Thomas’ gross earnings should reflect the expenses incurred by his business to produce those earnings. Business expenses are outgoings, and do not form part of the gross earnings of an ‘earner’ who ultimately receives the income of their business as their individual earnings. Mr Thomas’ ‘gross earnings’ are the net income of the business, before tax.
The insurer’s written submissions record that, as Mr Thomas did not derive any income from personal exertion between 14 July 2021 and 26 October 2021, his PAWE should be determined in accordance with Sch 1 cl 4(2)(a) of the MAI Act from when he commenced earning continuously, namely 27 October 2021. The insurer’s position in relation to the date from which Mr Thomas started to earn continuously has subsequently been modified. As recorded earlier, at the preliminary conference held on 31 March 2023 the insurer took the position that Mr Thomas started to earn continuously from 6 December 2021. Given this alteration in its position, the insurer agreed that the period amounted to 32 weeks, not 35.
The insurer’s written submissions also address the quantification of Mr Thomas’ PAWE in accordance with Sch 1 cl4(2)(a). However, those submissions do not reflect the insurer’s modified position with respect to when Mr Thomas started to earn continuously. The approach employed by the insurer to quantify PAWE reflects the methodology advocated for in the insurer’s submissions, namely, the division of gross business earnings before tax, less expenses (including depreciation), by the number of weeks in the relevant period. No account is made for pension or government Covid payments.
As recorded earlier in these reasons, the insurer argues that the facts do not support a finding that Mr Thomas’ PAWE should be determined in accordance with Sch 1 cl4(3). In this regard, the insurer relies on the reasons in Wannous at [18] – [20].
DETERMINATION
The insurer argues that Mr Thomas’ PAWE should be determined in accordance with Sch 1 cl4(2)(a) of the MAI Act.
Mr Thomas’ argument, as I apprehend it, is that there was a change in his earnings once the Covid lockdown came to an end, and that change resulted in him regularly earning more than he was earning before the change occurred. This is because he went from receiving no earnings during the Covid lockdown to receiving regular earnings from early 2022. The subclause that best fits Mr Thomas’ argument is cl 4(3) of Sch 1. It is convenient to address this subclause first.
Subclause 4(3) does not apply
Schedule 1 cl4(3) provides that if, during the 12 months immediately before the day of the accident, there was, as a result of any action taken by Mr Thomas, a significant change in his earnings circumstances that resulted in him regularly earning, or becoming entitled to earn, more on a weekly basis than he was earning before the change occurred.
The earnings schedules provided by Mr Thomas record that, other than the sums of $200.20 in the week of 27 September 2021 and $277.75 in the week commencing 25 October 2021, he did not receive any earnings as an earner from the week commencing 12 July 2021 until the week commencing 6 December 2021.
The note to Sch1 cl4(3) states that “[e]xamples of a change of circumstances to which th[e] subclause would apply include a change of job, a promotion, a move from part-time to full-time employment, or a pay increase arising from the achievement of performance standards.” The examples in the note are non-exhaustive; there may be other changes of circumstances to which the subclause would apply. However, what the examples have in common is that they all involve circumstances in which an earner has been earning. None of the examples involve circumstances where an earner goes from earning nothing to earning something. Accordingly, I consider that the term ‘earnings circumstances’, as used in Sch1 cl4(3), refers to circumstances involving an earner who is earning at the time the change in circumstances occurs. If the earner is not earning, there are no ‘earnings circumstances’, and the subclause does not apply. Put another way, for there to be ‘earnings circumstances’ there must be earnings.
For the purposes of Sch1 cl4(3), I find that, other than in the weeks of 27 September 2021 and 25 October 2021, Mr Thomas was not earning for the period commencing 12 July 2021 until the week commencing 6 December 2021. Although there was a change in circumstances, in that he went from receiving no earnings to receiving earnings, there was no change in earnings circumstances, as he was not earning when the change occurred.
In my assessment, Mr Thomas’ earnings from the week commencing 6 December 2021 until the week commencing 11 July 2022, although differing from week to week, do not show a significant change in his earnings circumstances during that period that resulted in him regularly earning more on a weekly basis.
Given my findings, I have determined that Sch1 cl4(3) does not apply.
Application of subclause 4(2)(a) and determination of PAWE
The insurer argues that, for the purposes of Sch 1 cl 4(2)(a), Mr Thomas commenced earning continuously on 6 December 2021. I agree. I find that it is from this time that he started to earn continuously. That this is so is evident from the earnings schedules he has provided.
Mr Thomas has provided screen shots from his invoice app in relation to payments received by his business as they relate to the disputed earnings. The invoices referred to record that each invoice had been paid. I accept that the screen shots are accurate and support the following findings in relation to the disputed earnings:
(a) In the week commencing 31 January 2022, Mr Thomas was paid $605 in relation to invoice No.82.
(b) In the week commencing 7 February 2022, Mr Thomas was paid $275 in relation to invoice No.83, and the sum of $220 for invoice No.84, a total of $495.
(c) In the week commencing 25 April 2022, Mr Thomas was paid the sum of $297 in relation to invoice No.85 and $352 for invoice No.86, a total of $649.
(d) In the week commencing 9 May 2022, Mr Thomas was paid the sum of $385 in relation to invoice No.87 and $275 in relation to invoice No.88. When combined with Airtasker earnings of $195, that are not disputed, the total for this period is $855.
Given my findings about the disputed earnings, and in circumstances where there is no dispute about the earnings in the other periods referred to in the schedules of earnings provided by Mr Thomas, I find that Mr Thomas’ gross earnings from his business between 6 December 2021 and the week commencing 11 July 2022 (relevant period) were as set out in the table below:
Week commencing
Total Gross Earnings
(Before expenses)
Week commencing
Total Gross Earnings
(Before expenses)
6 December 2021
$148
28 March 2022
$195
13 December 2021
$288
4 April 2022
$287
20 December 2021
$312
11 April 2022
Nil
27 December 2021
Nil
18 April 2022
Nil
3 January 2022
Nil
25 April 2022
$649
10 January 2022
$196.80
2 May 2022
Nil
17 January 2022
$205
9 May 2022
$855
24 January 2022
$209.10
16 May 2022
$82.50
31 January 2022
$605
23 May 2022
$577.50
7 February 2022
$495
30 May 2022
Nil
14 February 2022
Nil
6 June 2022
$385
21 February 2022
$347.10
13 June 2022
$541.20
28 February 2022
Nil
20 June 2022
$302.50
7 March 2022
Nil
27 June 2022
$165
14 March 2022
Nil
4 July 2022
$220
21 March 2022
$234
11 July 2022
$143
The total of Mr Thomas’ gross earnings from his business during the relevant period, before expenses (including depreciation) are deducted, is $7,442.70.
The earnings Mr Thomas received from the proceeds of his business is an amount net of the business expenses incurred in producing those earnings. The PKF report includes at Annexure 1.1 a summary of business expenses for the period 26 October 2021 to 30 June 2022. The expenses are taken from Mr Thomas’ 2022 tax return. I accept the summary as being accurate. However, the expenses have been calculated on a pro rata basis for a different period of time; I have found that the relevant period commences on 6 December 2021, not 26 October 2021. Further, as can be seen from the table of earnings above at [49], Mr Thomas did not receive earnings in some weeks during the relevant period. In these circumstances, I have pro-rated the expenses over the number of weeks that Mr Thomas received earnings during the relevant period at 42% of each expense (154/365). On this basis, I have determined that the following expenses are to be deducted from Mr Thomas’ gross earnings:
(a) motor vehicle - $829.08;
(b) materials - $210;
(c) app - $75.60;
(d) telephone - $162.96, and
(e) depreciation (mower trimmer and laptop) - $399.
The business expenses amount to $1,676.64. This sum is to be deducted from the gross business earnings during the relevant period, $7,442.70. This results in the sum of $5,766.06 ($7,442.70 - $1,676.64). The sum of $5,766.06 is Mr Thomas’ gross earnings received by him as an earner during the period commencing on 6 December 2021 to immediately before the day of the accident, 14 July 2022, a period of 32 weeks. Mr Thomas’ PAWE is the weekly average of his gross earnings received during this period, $180.19 ($5,766.06/32).
CONCLUSION
I find that Mr Thomas’ PAWE were $180.19.
Given my findings the insurer’s decision of 27 October 2022 is set aside. I remit the matter to the insurer to determine Mr Thomas’ entitlements under Part 3 Division 3.3 of the MAI Act in accordance with these reasons.
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