Zou v QBE Insurance (Australia) Limited
[2024] NSWPICMR 4
•1 March 2024
| CERTIFICATE OF DETERMINATION OF MERIT REVIEWER | |
| CITATION: | Zou v QBE Insurance (Australia) Limited [2024] NSWPICMR 4 |
| CLAIMANT: | Joanna Xiang Zou |
| INSURER: | QBE Insurance Australia Limited |
| MERIT REVIEWER: | Belinda Cassidy |
| DATE OF DECISION: | 1 March 2024 |
| CATCHWORDS: | MOTOR ACCIDENTS - Motor Accident Injuries Act 2017; claimant’s application for merit review in respect of insurer’s determination that the claimant’s pre-accident weekly earnings (PAWE) was nil; claimant a self-employed jewellery maker who commenced a her business in 2021; insurer relies on report from expert; records of the business indicate the business was operating at a loss and the claimant’s most recent income tax return did not disclose income other than dividends and interest; claimant provided no new or additional information or submissions; Held – insurer’s decision affirmed, claimant’s PAWE was nil; no matter of principle. |
| DETERMINATIONS MADE: | CERTIFICATE OF DETERMINATION Issued under s 7.13(4) of the Motor Accident Injuries Act2017 The reviewable decision concerns the amount of statutory benefits that are payable under Division 3.3 of the MotorAccident Injuries Act2017 and is therefore a merit review matter under Schedule 2(1)(a) of the Act. 1. The reviewable decision is affirmed. 2. The claimant’s pre-accident weekly earnings amount is $nil. |
STATEMENT OF REASONS
INTRODUCTION
Joanna Zou was involved in a motor accident on 14 June 2023. She was a passenger in a car driven by her husband when another car collided with theirs at an intersection. The claimant sustained injuries including a broken wrist.
On or about 25 June 2023, Ms Zou lodged an application for statutory benefits with QBE Insurance (Australia) Limited (the insurer of the other vehicle) and QBE has accepted that claim.
A dispute has arisen in the claim about the amount of Ms Zou’s pre-accident weekly earnings (PAWE). The PAWE amount forms the basis of the amount of weekly statutory benefits to be paid by QBE to Ms Zou. The claimant has referred that dispute to the Personal Injury Commission (Commission) for determination and the President of the Commission (or his delegate) has allocated the proceedings to me for the purposes of conducting the merit review.
Ms Zou is not legally represented. As she does not speak or read English well, she has had sought assistance from her husband, James Wu throughout the proceedings.
LEGISLATIVE FRAMEWORK
The governing legislation in relation to Ms Zou’s claim is the Motor Accident Injuries Act 2017 (the MAI Act). Ms Zou’s claim for statutory benefits is made under Chapter 3 of that Act. A claim for statutory benefits includes income support (weekly benefits) under Division 3.3 as well as treatment and care benefits under Division 3.4.
Sections 3.6 and 3.7 of the MAI Act provide that:
“An earner who is injured as a result of a motor accident and suffers a total or partial loss of earnings as a result of the injury is entitled to weekly payments of statutory benefits …”
Weekly benefits are paid at the rate of 95% of the difference between the injured person’s pre-accident weekly earnings and their post-accident earnings for the first 13 weeks after the accident.[1] From week 14 to week 78, weekly benefits are paid at the rate of 80% or 85% of the difference between the injured person’s PAWE and their post-accident earnings depending on whether the injured person has a total loss or earnings or a partial loss of earnings.[2]
[1] Section 3.6(2) of the MAI Act.
[2] Section 3.7(2).
Schedule 1 to the MAI Act provides a series of definitions which apply to the determination of weekly payments of statutory benefits:
(a) “earner” is defined in cl 2 as a person who was employed or self-employed at any time during the eight weeks immediately before the motor accident;
(b) “loss of earnings” is defined in cl 3 as “a loss incurred or likely to be incurred in a person’s income from personal exertion”, and
(c) “pre-accident weekly earnings” is defined in cl 4 as, “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 …”
An injured person’s “income from personal exertion” is explained in cl 3(2) as being:
“(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.”
Sub-clause (3) provides that an injured person’s income from personal exertion does not include interest, rents, dividends, superannuation contributions or leave entitlements.
INSURER DECISION-MAKING
In an email dated 4 July 2023, QBE advised the claimant of her claim number and requested “a copy of all of your pay history in the 52 weeks before the accident”, QBE also requested she complete a tax file declaration for the Australian Taxation Office (ATO).
On 7 July 2023, QBE wrote to the claimant advising that QBE accepted liability to pay statutory benefits up to 52 weeks from the date of her accident. QBE advised the claimant in that letter that:
(a) she was entitled to income benefits, paid fortnightly “depending on your earnings and fitness for work”;
(b) the cost of treatment and care necessary to recover from her injuries;
(c) a recovery plan would be created in conjunction with her and her treatment providers, and
(d) expenses relating to her treatment and recovery would be paid.
QBE advised Ms Zou that she was entitled to weekly payments of her average PAWE from the day of her accident, that calculations were currently being processed and in the interim, she was to be paid $559.50. QBE said, “interim PAWE is only available for 13 weeks, so it’s important to solidify your individual PAWE for payments to continue after this time.”
It was explained that, for the first 13 weeks she would be paid at 95% of her PAWE, for the next 13 weeks 80% of her PAWE or 85% if she had a partial loss of earnings.
A series of emails were sent on 7 July 2023 by QBE and the claimant’s husband. A notice of assessment (from the ATO) was requested by QBE and the claimant’s 2022 tax return and notice of assessment was provided by her husband. Mr Wu later advised QBE that the claimant had not completed her 2023 tax return because of her injuries. QBE advised that her PAWE would be calculated by a firm called Procare.
On 3 November 2023, QBE wrote to the claimant advising her that:
(a) QBE accepts Ms Zou is an “earner” within the meaning of the definition in the Act, and
(b) her PAWE have been calculated at “nil”.
QBE provided Ms Zou with a copy of the Procare report and said, “we worked with Procare to understand your income for personal exertion, which is income exclusive of costs like material and operating costs, over the last 52 weeks.”
On 14 November 2023 the claimant requested, through her husband, an internal review of the insurer’s decision about her PAWE.[3] On 28 November 2023 QBE undertook that internal review.
[3] I have not been provided with a copy of the actual application for internal review.
The insurer noted the claimant’s husband’s emails referred to the definition of “pre-accident weekly earnings” in the legislation and the reference to “weekly average of the gross earnings …” QBE also noted that Mr Wu said that, “the income for personal exertion is the gross earnings before costs.”
QBE referred to a decision AGZ v NRMA Insurance Pty Limited[4] and says for a self-employed person, gross earnings means net profit after all expenses are paid by the business.
[4] [2019] NSWDRS MR 184.
The insurer confirmed it accepts the claimant was an “earner” within the meaning of the legislation and that the income and expense amounts of her business were accepted which meant the PAWE was calculated at nil.
SUBMISSIONS FROM THE PARTIES
Claimant’s submissions
On Sunday 17 December 2023, the claimant’s husband emailed the Commission’s help line and lodged an application form with these submissions:
“I am writing to formally file a complaint regarding the PAWE calculation and decision, as I find the current explanation confusing. The QBE PAWE confirmation letter explicitly states that income for personal exertion should be considered, excluding costs such as material and operating costs over the last 52 weeks. However, the Procare PAWE report indicates that the business operated at a loss, resulting in a PAWE calculation of Nil.
My concern is that the internal review did not focus on Joanna's current capacity and fitness to generate income as she did before the accident. Instead, it referenced a court case unrelated to the specific questions I raised. The undeniable fact is that, had the accident not occurred, Joanna would be capable of maintaining or increasing her income from her business. The ongoing costs and expenses of the business are standard and wouldn't hinder Joanna from continuing to generate income, thereby enabling her to reduce or settle her debts. Unfortunately, due to this unforeseen accident, Joanna is now unable to do so.
I kindly urge the PIC to conduct a fair and reasonable merit review and assessment, focusing on how this accident has hindered Joanna from operating her business as usual. This impairment prevents her from performing daily business functions such as design, production, operation, and delivery. Consequently, Joanna's ability to generate income has been significantly impacted.”
The application form is dated 17 December 2023. It indicates the application is made by the claimant, she is not a person under a legal incapacity and that her husband James Wu is the “authorised contact person”.
Mr Wu indicated on the form that the matter involved a merit review, medical assessment and claims assessment and concerned an internal review decision dated 28 November 2023. Mr Wu, and not the claimant, declared the application to be correct and indicated he was the claimant’s appointed representative.
Insurer’s submissions
The insurer confirms there is no dispute that the claimant is an earner and that she has an entitlement to weekly benefits. The insurer noted that the claimant was a self-employed jewellery maker and subcontractor to Metou Care Pty Limited.
The insurer relies on the Procare report and says that the total gross earnings of the claimant’s business in the 52 weeks before the accident was $35,597. The insurer refers to information from the claimant’s husband that the business expenses for the same period was $39,010. The business operated at a loss of $3,413.
The insurer says the claimant’s taxation return showed no personal income derived from the business.
The insurer refers to the decision of Walker v QBE Insurance Australia Limited[5] in support of the insurer’s argument as to how PAWE is to be calculated when someone is self-employed. The insurer says the claimant’s PAWE is $nil.
[5] [2023] NSWPICMR 40.
Procedural matters
On 30 January 2024 I held a telephone conference with the claimant, her husband and the insurer’s representative. The claimant gave evidence with the assistance of both her husband and an accredited interpreter arranged by the Commission.
I confirmed with the claimant that she was not under a legal incapacity, and she demonstrated an excellent understanding of the proceedings and the issues in the proceedings. She explained that she could not read or write in the English language and that she relied on her husband to help her. Mr Wu confirmed that he was not a lawyer but was providing assistance to his wife with the claims process. I explained to both Ms Zou and her husband the difference between a statutory benefits claim and a damages claim and encouraged the claimant to consider retaining a lawyer to help her with any damages claim due to the issues in respect of her capacity to earn and the quantification of the losses of her business and her own losses.
In a report following that conference, I noted that the claimant said she did not want to get an expert accountant’s report to answer the insurer’s Procare report. I issued directions and gave Mz Zou and her husband additional time to:
(a) detail the errors they say are in the Procare report;
(b) provide documentary evidence supporting the business earnings they say should be calculated at $42,000;
(c) address the term “proceeds of any business carried on by the person” in the legislation;
(d) explain how Ms Zou says PAWE should be calculated, and
(e) address the principles in any of the cases referred to by the insurer.
On 22 February 2024 Ms Zou’s husband contacted the Commission and advised
Ms Zou did not wish to put any further documentation or information to the Commission. As a result, I advised the parties I would decide the matter based on the information and documentation provided by them to date.
REVIEW OF THE EVIDENCE
The claimant has filed 33 individual documents in the portal. Many of these concern the claimant’s injuries and treatment.
The insurer has filed a bundle comprising documents some of which have already been provided by the claimant.
Claim documents
The application for personal injury benefits was dated 25 June 2023. It was signed by the claimant and declared as true and correct.
Relevant to the current proceedings, the claimant said she had been away from work since the accident, that she was self-employed and that she was a “Jewellery Hand Maker” earning $4,000 per month.
Dr Tang completed a certificate of fitness on 1 July 2023. The doctor certified the claimant unfit for work from 28 June to 22 July 2023 noting the claimant was self-employed. A second certificate dated 12 July 2023 was completed by Dr Tang in similar terms.
A third certificate was completed by Dr Tang on 21 July 2023. Dr Tang noted the claimant’s treatment plan included simple analgesia, review by a neurologist, orthopaedic review, psychologist review, hand therapy review and pain clinic review. She also noted the claimant’s home may require modification to enable the claimant to stay at home safely.
In the fourth certificate completed by Dr Tang on 5 August 2023 the doctor noted “prolonged QTC possibly secondary to drug interaction” and as a result a review with a cardiologist was recommended as part of the recovery plan. Dr Tang continued her certification that the claimant had no current capacity for work.
The next certificate of capacity was dated 8 September 2023, signed by Dr Tang and is in similar terms to the previous ones. In the next certificate, dated 7 October 2023,
Dr Tang again certified that the claimant had no capacity for work.
In her certificate dated 4 November 2023, Dr Tang certified the claimant had capacity to work four hours a day, three days a week. A further certificate in similar terms was completed on 5 January 2024.
Medical records
The claimant’s right wrist was scanned at hospital on 14 June 2023 and the CT report indicates:
(a) a “comminuted intra-articular distal radius fracture with mild dorsal displacement;
(b) volar bony fracture fragment measuring 10 mm, and
(c) mildly displaced ulnar styloid process fracture.
Also scanned was the claimant’s brain (no abnormality); cervical spine (no abnormality), chest (no rib or sternal fractures but two small nodules and some atelectasis in the lungs), abdomen (no abnormality), lumbar spine and pelvis (no fractures). The claimant’s left knee was X-rayed later but no fracture, dislocation or effusion was seen.
The discharge report from Royal Prince Alfred Hospital (RPAH) notes that the claimant is 51 years of age, speaks Mandarin at home and requires an interpreter. Her regular general practitioner (GP) is identified as Dr Tang of the My Health Medical Centre in Ryde.
The summary notes the claimant had surgery on 15 June 2023 to fix the right wrist fracture and was given paracetamol and ibuprofen with a request for follow up in two weeks’ time for wound review.
The claimant returned to RPAH on 20 June 2023 for further surgery and she was discharged on 22 June 2023. The discharge document refers to “carpal tunnel symptoms post distal radius ORIF” (open reduction with internal fixation) and it was noted she had a right carpal tunnel release and exploration of the median nerve in the forearm. The operating doctor noted there was no obvious injury to the median nerve and she required review in the fracture clinic. Ms Zou’s GP was now identified as the Harbourside Medical Centre in Wentworth Point.
An X-ray of the right wrist on 20 June 2023 was compared with the scans from the day of the accident. The plate and screw were noted with no complication. The fracture of the ulnar styloid was unchanged in alignment.
On 13 July 2023 the claimant was seen by Dr Ratnayake in the RPAH pain clinic with ongoing pain around the wound site, difficulty turning her wrist and hand, numbness in the thumb, pain with movement and ongoing paraesthesia with no improvement.
The claimant was said to have an arthritic condition being treated by a private rheumatologist (Sjogren’s syndrome). Ms Zou was said to be right-handed, working as a jewellery maker for herself. She said she needed help with showering and dressing, her husband was undertaking domestic duties and she did not usually drive. The claimant was said to be able to feed herself. There is a history of the development of psychological symptoms, and she was said to live at home with her husband.
The claimant’s medication was adjusted, she was referred for hand therapy and it was suggested she see a psychologist.
On 26 July 2023, an Allied Health Recovery Request (AHRR) was sent to the insurer concerning three sessions of hand therapy at RPAH. It was noted that “Patient did not have regular hand therapy to help patient to manage her injury initially and she had developed fear of exercises and [was] overprotective of her hand. Her wrist has become very stiff and sensitive to touch and movements. She need the regular hand therapy to overcome these issues.”
Ms Jia, a physiotherapist with “the Hands Physio” wrote a “to whom it may concern” letter dated 16 January 2024 advising that the claimant has been having treatment, has been unable to return to work and has limitations at home. She refers to a possible complex regional pain syndrome developing.
The claimant has provided a series of emails between her husband and QBE from
28 July to 3 August 2023 concerning the delay in a rehabilitation provider advising QBE about the claimant’s condition.
On 31 July 2023 an AHRR was sent to the insurer by Ms Lam of New Vision Psychology seeking approval for eight counselling sessions to address the claimant’s post-traumatic stress disorder symptoms.
Pre-accident weekly earnings information and documentation
On 12 July 2023, Ms Davis from Procare wrote to the claimant’s husband requesting information and documentation to assist Procare in determining the claimant’s PAWE. There is an exchange of emails between Procare and Mr Wu concluding on
26 October 2023.
The Procare report is dated 2 November 2023. The author of it is Mr Croft, a chartered accountant.
Mr Croft notes at [15] that in the 12 months before her accident, Ms Zou was self-employed in her jewellery business and was a subcontractor to a company called Metou Care Pty Limited. In the eight weeks before the accident, the claimant earned income from her business.
Mr Croft records at [20] that some of the documentation requested had not been provided by the claimant.
The report includes the following:
(a) at [21] is a summary of the claimant’s declared income, dividends and business losses;
(b)
the claimant earned income from Metou Care in the sum of $10,100 from
1 June 2022 to 30 May 2023. It was said that this income was paid into
Ms Zou’s Bank of China account, but no bank statements have been provided to confirm this. At [34] Mr Croft advises he has included this income in his calculation, and
(c)
there is a variance between the claimant’s business excel spreadsheet and the deposits in the records from her other financial institutions. At [31]
Mr Croft says he has included all deposits in his calculations.
Mr Croft says the usual method for calculating the PAWE for a self-employed claimant is to ascertain the net income of the business, deduct work-related expenses incurred in deriving that income and dividing it by the number of weeks in the relevant period.
Mr Croft calculated that:
(a) the claimant’s business income was $35,597;
(b) her business expenses were $39,010, and
(c) her business loss was $3,413.
Mr Croft notes in [schedule 1] that in the 2022 financial year, the claimant’s business operated at a loss of $17,862, that the notice of assessment issued by the ATO in 2022 was $419 and in 2023 she earned $2,294 from dividends and interest income.
The claimant’s oral evidence and additional submissions
Ms Zou confirmed she has a jewellery making business which has an ABN. She confirmed she did not have a contract of employment with the business and did not pay herself a wage from the business but that her business was her own and the proceeds of the business belonged to her.
Ms Zou clarified that she has never worked at Metou Care Pty Limited “providing care to patients.” She says she sold jewellery to Metou Care who she understands provide care to patients, and Metou Care purchased jewellery from her and gave the jewellery to their clients as gifts.
Ms Zou does not have an accountant. She runs her business using an excel spreadsheet. She said her husband helps her with this and that he completes her taxation returns. Mr Wu said he is an IT manager and has no accounting qualifications.
The claimant says she started her business in July 2021, and it was still at the “beginning stage” at the time of her accident and she had to buy a lot of material and invest in equipment (such as a computer and camera) in the early days. She says she uses the computer and the camera but does not claim the cost of it every year.
Ms Zou said she made $42,000 in the year before the accident and could have earned more in 2023 and even more in 2024.
Ms Zou and Mr Wu said that QBE in their letter of 3 November 2023 said that the claimant’s income from personal exertion was income exclusive of costs like material and operating costs. Ms Zou and Mr Wu say on the basis of what QBE have said, QBE should be paying Ms Zou’s PAWE based on the gross earnings of the business without deducting the expenses of the business.
Mr Wu also referred to information on the ATO website about calculating the gross earnings of a business and that the gross earnings of his wife’s business is what the business earned not including the expenses of the business.
CONSIDERATION OF THE ISSUES
Is Ms Zou an earner and is she able to earn?
QBE accepts that Ms Zou is a self-employed earner and is entitled to statutory benefits under Part 3 of the MAI Act.
QBE has accepted that Ms Zou has sustained an injury which has prevented her from working for a period of time after the accident.
What is Ms Zou’s income from personal exertion?
Income from personal exertion does not include Ms Zou’s interest and dividends. According to the Procare report, Ms Zou’s 2022 taxation return indicates her income was limited to interest and dividends.
I have not been provided with a copy of the claimant’s 2023 taxation return. Mr Wu told QBE his wife had not completed it due to her injuries. Ms Zou said at the preliminary conference she relied on her husband to complete her tax returns.
If Ms Zou was an employed person, then her income from personal exertion would be her earnings, salaries, wages and so on as defined in Schedule 1 of the MAI Act, cl 3(2)(a). However, Ms Zou was not an employed person. She carries on a business through a sole-trading entity. As the owner of that business she is entitled to the “proceeds of that business” and in my view, it would be those proceeds that would represent Mz Zou’s income from personal exertion.
What is Ms Zou’s pre-accident weekly earnings?
Schedule 1, cl 4(1) says that an injured person’s PAWE is “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”.
Subclause 2 does not apply because the claimant had been earning continuously for at least 12 months and there has been no significant change in her earning circumstances in the 12 months before the accident.
If Ms Zou was employed by someone or some entity, then her PAWE would be calculated by reference to the gross earnings paid to her by her employer and before tax. However, Ms Zou was not employed but was self-employed in her own business.
Ms Zou’s business cannot make a claim for statutory benefits, statutory benefits accrue to Ms Zou because of her personal injury (including her fractured wrist).
The “weekly average of the gross earnings received by the earner as an earner” means in my view, the weekly average of the gross earnings Ms Zou received as an earner in the business. That requires, in my view, a distinction to be drawn between the gross earnings of the business, as a business entity, and the gross earnings received by
Ms Zou from the business.
I note the reference from Ms Zou and Mr Wu to information published by the ATO establishing rules for the calculation of the gross earnings of a business. This information would clearly be relevant for the calculation of taxation payable by the business. But the focus of the motor accidents legislation, in my view, is the gross earnings of Ms Zou as separate and distinct from the gross earnings of her business.
Ms Zou’s gross earnings received from the business are the proceeds from that business and the proceeds from that business are, in my view, clearly the income from the business less the expenses of that business. In the circumstances of a business operating at a profit, the gross profit would be there for Ms Zou to receive, to declare as income in her tax return and to spend as she sees fit. However, Ms Zou’s business was in its infancy, and it was operating at a loss which means there was no surplus, and nothing to declare as income and no amount of money available for Ms Zou to spend on anything personal to her.
CONCLUSION
It is unfortunate that the letter from QBE to the claimant on 3 November 2023 appears to be a template letter sent when an injured person is an employed earner. The contents of this letter clearly appears to have led to a misunderstanding by the claimant as to her entitlements.
The legislative framework is clear. I am required to apply the legislation and the legislation requires me to consider the “proceeds of any business carried on by” Ms Zou, and the earnings Ms Zou received from that business in the 12 months before the accident. The documentation relied on by Ms Zou establishes that the business was running at a loss and that she herself received no income from that business. Her only income declared in her most recent taxation return is dividends and interest which is not income from personal exertion.
I am therefore satisfied, on the information before me, that Ms Zou’s PAWE should be assessed at nil.
The decision of QBE as to the claimant’s PAWE is affirmed.
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