SIRA Logo

AAW v CIC Allianz Insurance Ltd [2018] NSWDRS MR 023

Overview

Jurisdiction: merit review

Catchwords: PAWE – Pre accident weekly earning – weekly payments – actual business costs – self employed – multiple income source – definition of pre accident weekly earnings – definition of earner – income as employee and self employed – PAWE.

Legislation cited:

  • Motor Accident Injuries Act 2017 (NSW) ss 7.13, Div 3.3, Schedule 1 cl 2, cl 4(1), cl 4(2)(a), 4(2)(b) & 4(2)(c), Schedule 2
  • Motor Accident Injuries Regulation 2017
  • Motor Accident Guidelines effective 13 July 2018Cases cited: N/A

Parties:

  • AAW – Claimant
  • CIC Allianz Insurance Ltd – Insurer

Disclaimer: This decision has been edited to remove all unique personal identification including the name of the claimant.

Merit review certificate

View here

Issued under section 7.13(4) of the Motor Accident Injuries Act 2017

ClaimantAAW
InsurerCIC Allianz Insurance Ltd
Claim number37C000144
Reviewable decision makerBojana Grujic
Date of Reviewable decision8 May 2018
Nature of Reviewable decisionThe amount of statutory benefits payable
Our reference10040394
Merit reviewerRachel Brittliff
Date of merit review certificate12 September 2018

Merit reviewer's determination

This determination relates to a merit review matter, which is a reviewable decision under Schedule

2(1)(a) of the Motor Accident Injuries Act 2017 (“the Act”), about the amount of AAW’s PAWE for the purpose of calculating his entitlement to weekly payments.

My determination of the Merit Review is as follows:

  • The reviewable decision is set aside and the decision is remitted to the Insurer for reconsideration in accordance with these directions:
    • The Insurer is to determine AAW’s PAWE in accordance with clause 4(1) of Schedule 1 of the Act.
    • The Insurer is to obtain information regarding AAW’s actual costs of business in self-employment and is to deduct these from his self-employment earnings before calculating his PAWE.
    • The Insurer is to calculate AAW’s PAWE as follows:

(Earnings from employment and self-employment in the 12 months immediately before the day on which the motor accident occurred ÷ 365) x 7

  • The Insurer is to calculate the amount of AAW’s weekly statutory benefits in accordance with the value of the PAWE calculated in accordance with the method set out above.
  • Effective Date: This determination takes effect from 8 May 2018. The calculation of AAW’s correct PAWE is to occur no later than 7 days after the date of this decision.

A brief statement of my reasons for this determination are attached to this certificate.

Rachel Brittliff

Merit Reviewer, Dispute Resolution Services

Merit reviewer's reasons for determination

Background

1. AAW was involved in a motor vehicle accident on 10 February 2018. The Insurer determined that AAW was entitled to weekly payments of statutory benefits under Division 3.3 of the of the Motor Accidents Injuries Act 2017 (“the Act”).

2. In the 12 months prior to his accident, AAW was employed by Ranstad and Broadspectrum as an employee and contracted his services as a self-employed contractor to Uber and Taxify.

3. The Insurer determined AAW’s pre-accident weekly earnings (“PAWE”) in order to calculate the weekly statutory benefits payable to him. In a letter dated 8 May 2018, the Insurer wrote to AAW and indicated that it had determined that his PAWE was $1,563.50.

4. AAW applied for an internal review of the Insurer’s decision. The Insurer conducted the internal review and wrote to AAW in a letter dated 28 June 2018 with the outcome. The Insurer affirmed its earlier decision in this letter.

5. On 24 July 2018 AAW applied to the Authority for a merit review of the Insurer’s decision. The application has been made in accordance with the requirements under the guidelines and has been accepted by the Authority.

Documents and information

6. I have considered the documents provided in the application and the reply and any further information provided by the parties.

Submissions

7. AAW has made the following submissions in support of his application for merit review:

  • According to me the decision that has been made doesn't seems to be fair as I have clearly intimated that am not working my part-time job since the incident happened.
  • It should be considered as 10 weeks average as it has been calculated for 52 weeks which is absolutely unfair. The reason that I started working part-time is to make some money by realizing that my avg. income is less than what is actually required.
  • Unfortunately some incident stopped me after 10 weeks, which made me loose that income. The assessor used 2 different methodologies to derive the income loss: why was the 2nd assessment is not considered? When it is the actual situation that I have lost income with 2nd job and since day 1 I am talking about the same (even if it is self- employed).

8. The submissions of the Insurer are as follows:

  • It relies on the reasons set out in the internal review decision and in the “Report of Vincents”.
  • It acknowledges AAW’s assertion that it is unfair to calculate the average of earnings (including from his second job) over a period of 52 weeks, however, the decision has been made in accordance with the requirements of the Act.
  • Clause 4, Schedule 1 of the Act is construed such that earnings from self-employment do not attract the exceptions listed in subclauses 2 and 3.
  • Clause 4(2) of the Act specifically states “other than a self-employed person”. In such circumstances, the pre-accident weekly earnings are to be calculated with reference to Clause 4(1) of the Act.

Legislation

9. In conducting my review I have considered the following legislation and guidelines:

  • Motor Accident Injuries Act 2017 (NSW) (“the Act”)
  • Motor Accident Guidelines effective 13 July 2018 (“the Guidelines”)
  • Motor Accident Injuries Regulation 2017 (NSW) (“the Regulation”)

Reasons

Definition of pre-accident weekly earnings (PAWE)

Definitions

10. The definition of PAWE is set out at clause 4 of Schedule 1 of the Act as follows:

(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 (other than a self- employed person) 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 received by the earner as an earner during the period from when the change of circumstance referred to in that subclause occurred to immediately before the day of the motor accident,

(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.

11. Clause (4)(2)(b) of the Act refers to subclause 3 as follows:

(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.

12. There is no dispute that AAW is an earner who was injured as a result of a motor accident. As Schedule 1 clauses 4(2)(a1) and (b) refer to a particular classification of earner, it is important to determine the particular subclause in the definition of “earner” that applies to AAW.

13. Schedule 1, clause 2 defines the meaning of “earner” as follows:

A person who is injured as a result of a motor accident is an earner if the person is at least 15 years of age and who:

(a) was employed or self-employed (whether or not full-time):

(i) at any time during the 8 weeks immediately preceding the motor accident, or

(ii) during a period or periods equal to at least 13 weeks during the year immediately preceding the motor accident, or

(iii) during a period or periods equal to at least 26 weeks during the 2 years immediately preceding the motor accident,

and, at the date of the motor accident, had not retired permanently from all employment, or

(b) before the motor accident, had entered into an arrangement (whether or not an enforceable contract):

(i) with an employer or other person to undertake employment, or

(ii) to commence business as a self-employed person, at a particular time and place, or

(c) was, immediately before the motor accident, receiving a weekly payment or other payment in respect of loss of earnings under this Act or the Workers Compensation Act 1987.

Employment background

14. AAW was employed with Broadspectrum and self-employed as a driver with Uber and Taxify during the 8 weeks prior to his accident. AAW is therefore an earner in accordance with Schedule 1, clause 2(a)(i) of the Act.

15. Schedule 1, Clause 4(1) of the Act sets out the method of calculation of PAWE unless subclause 2 applies to the earner.

16. AAW has not made submissions in relation to the section of the Act under which his PAWE should be calculated but has requested a review of the calculation of his PAWE, noting that he finds the division of his earnings from self-employment as a driver with Uber and Taxify over a period of 12 months to be unfair.

17. Schedule 1, clause 4(1) of the Act is the appropriate mechanism for calculating the PAWE of an injured person, unless any part of clause 4(2) applies to that person.

18. The Insurer submits that at the time of his accident, AAW was self-employed and that as a result he is excluded from any of the methods of calculation under Schedule 1, clause 4(2) of the Act. While Schedule 1, clause 4(2) does include the words “other than a self-employed person”, the subclauses within that clause refer to income from self-employment and must be considered in their entirety.

19. I also note that AAW derived income as an earner both as an employee and a self- employed person at the time of his accident. In light of the differentiation between employment and self-employment, I consider that PAWE from each source of income should be calculated in accordance with the most appropriate provision of the act and that the resulting values for each role should then be added together to determine the final PAWE.

Reasons and findings

20. Employer/employee income. AAW was employed by two employers in the 52 weeks prior to his injury. He was initially employed through a labour hire contractor, Ranstad, and later transferred to the employer Broadspectrum where he had been working as a contractor through Ranstad.

21. There are payroll records that indicate that AAW worked continuously, first for Ranstad and then for Broadspectrum in the 12 months prior to his accident. There were no significant increases in his pay with either of those employers during that time. AAW therefore does not meet the criteria for his PAWE for these employers to be determined in accordance with clauses 4(2)(a) or (a1) of Schedule 1 of the Act.

22. Clause 4(3) of Schedule 1 of the Act applies where an earner has had a significant change in their earnings or their entitlement to earnings in the 12 months prior to the accident. This is not the case in relation to AAW’s earnings with Ranstad or Broadspectrum. Clause 4(2)(b) of Schedule 1 of the Act therefore does not apply to the calculation of AAW’s PAWE.

23. AAW is not an earner as the result of having entered into any arrangement to undertake employment or self-employment. He is an earner in accordance with Schedule 1, clause 2(a)(i) of the Act.

24. I therefore find that AAW’s PAWE from his earnings in his employer/employee relationships is to be determined in accordance with clause 4(1) of Schedule 1 of the Act.

25. Self-employment. AAW’s self-employment as driver commenced in November 2017. Notwithstanding that Schedule 1, clause 4(2) of the Act states that it does not apply to a self- employed person, some of the subclauses within that clause refer to self-employment and should be considered in the context of AAW’s claim for weekly payments.

26. Clause 4(2)(a) of Schedule 1 of the Act cannot apply to AAW in relation to his driver earnings. Subclause (a) follows directly from clause 4(2) which excludes self-employed people and there is no exception that is contained within the subclause.

27. Clauses 4(2)(a1) and (c) of Schedule 1 of the Act are not applicable to AAW for the same reasons outlined above in relation to his employment with Broadspectrum. That is, he was continuously employed in self-employment and was not an earner by way of the description set out in clause 4(2)(c) of Schedule 1.

28. The final remaining clause to consider is that of 4(2)(b) of Schedule 1 of the Act. This clause applies to an earner to whom subclause 3 applies. There is no provision in either subclause 2(b) or 3 that makes an exception to the overarching statement that clause 4(2) does not apply to self-employed people. I therefore find that AAW’s PAWE from his work as a self- employed driver cannot be calculated in accordance with Schedule 1, clause 4(2)(b) of the Act.

29. I appreciate AAW’s position that it is unfair to have earnings for a period of 10 weeks averaged over 12 months. AAW’s particular circumstances mean that to arrive at a weekly amount for PAWE, the Act requires that his total earnings over the 12 months prior to his accident be averaged over the entire period as described below.

30. I note that the Insurer has used the “2014 survey of taxi drivers and operators” to determine AAW’s operating costs, which they have deducted from his self-employment earnings. A role in secondary employment as a driver for Uber and Taxify is not the same as the role of a taxi driver. The cost structures, earnings and patterns of work are likely to vary greatly. In calculating AAW’s business costs in self-employment, the Insurer must obtain accurate data from him in relation to his actual costs and should use this information when determining PAWE.

31. Calculation of earnings. As AAW’s PAWE from each of his employment categories is to be determined in accordance with clause 4(1) of Schedule 1 of the Act, it is appropriate that his earnings from each of the roles are added together and divided by 365 days (12 months), then multiplied by 7 to obtain a weekly average.

Determination

My determination of the Merit Review is as follows:

  • The reviewable decision is set aside and the decision is remitted to the Insurer for reconsideration in accordance with these directions:
    • The Insurer is to determine AAW’s PAWE in accordance with clause 4(1) of Schedule 1 of the Act.
    • The Insurer is to obtain information regarding AAW’s actual costs of business in self-employment and is to deduct these from his earnings before calculating his PAWE.
    • The Insurer is to calculate AAW’s PAWE as follows:

(Earnings from employment and self-employment in the 12 months immediately before the day on which the motor accident occurred ÷ 365) x 7

  • Effective Date: This determination takes effect from 10 February 2018. The calculation of AAW’s correct PAWE is to occur no later than 7 days after the date of this decision.

Rachel Brittliff

Merit Reviewer, Dispute Resolution Service