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ABO v QBE Insurance (Australia) Limited [2019] NSWDRS MR 041

NSW DISPUTE RESOLUTION SERVICE (NSWDRS)
JurisdictionMerit Review
Catchwords'Other matters' – loss of earnings – permanent nature – loss of capacity – resident outside of Australia – personal exertion – UK – flight attendant
Legislation cited                    Motor Accidents Injury Act (NSW) ss 3.21, 3.21(2)(a), 3.21(2)(b), 3.6, 3.7, 3.8, 3.15, 3.16, 7.2(3), Schedule 1
Motor Accident Guidelines effective 13 July 2018 cl 7.67.10, 7.70
Motor Accident Injuries Regulation 2017 (NSW)
Cases cited

N/A

Text citedN/A
Parties ABO - Claimant
QBE Insurance (Australia) Limited - Insurer
DisclaimerThis decision has been edited to remove all Unique Personal Identification including the name of the Claimant.

'Other Matters' Assessment Certificate

View the certificate

Issued in accordance with section 7.2(3) of the Motor Accident Injuries Act 2017 and clauses 7.67.10 AND 7.70 of the Motor Accident Guidelines

Determination of a matter under section 3.21(2)(a)

ClaimantABO
InsurerQBE Insurance (Australia) Limited
Date of Accident11 January 2018
DRS Reference10047669
Insurer Claim Number360005178101
DRS Decision MakerKatherine Ruschen
Date of Decision18 February 2019
Conference date and time10 December 2018 at 10.30 am
Conference venue and locationBy telephone
Attendances for ClaimantMr Greg McKean
Attendances for InsurerMr Tom Livanos

The findings of the assessment of this Other Matter are as follows:

(a)  For the purpose of section 3.21(2)(a) the Claimant’s loss of earnings as a result of the injury sustained in the motor vehicle accident on 11 January 2018 is not likely to be of a permanent nature. Accordingly, there is no entitlement to weekly payment of statutory benefits.

(b)  Effective Date: 18 February 2019

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

Katherine Ruschen
Decision Maker
Dispute Resolution Services

Reasons for decision – ‘Other Matters’ Assessment

Issued in accordance with section 7.2(3) of the Motor Accident Injuries Act 2017

Background

This determination arises under section 3.21(2)(a) of the Motor Accident Injuries Act 2017 about whether the claimant’s loss of earnings is likely to be of a permanent nature.

1.  The Claimant resides in the United Kingdom. She works as an air hostess for (ABO’s Employer) and was injured in a motor vehicle accident in New South Wales on 11 January 2018 whilst on a stopover in Sydney during the course of her employment.

2.  The Claimant sustained a right knee fracture and was certified as having no capacity for work, initially from 17 January 2018 to 6 March 2018. On 30 April 2018 the Claimant was certified fit to return to work on altered hours until 30 July 2018.

3.  During the period from the date of the accident until about 29 March 2018 the Claimant was paid sick leave entitlements by her employer.

4.  It is understood the Claimant returned to work on 29 March 2018 on altered hours. Whilst pay records indicate she received her full basic pay upon her return to work, the Claimant says she suffered a reduction to her earnings by way of reduced “variable pay” she received on top of her basic salary in the form of allowances for items such as standby and daily living allowances whilst overseas.

5.  The Claimant’s claim is for a closed period only, until 30 July 2018. The Claimant seeks reimbursement of her sick pay so she can obtain a credit for it from her employer for future use in case of sickness, if required. In addition, the Claimant claims the difference between her pre-accident variable pay and her post accident variable pay during the period 29 March 2018 to 30 July 2018.

Documents considered

6.  I have considered the documents provided in the application and the reply and the further information provided by the parties following the teleconference on 10 December 2018.

Submissions

7.  The Claimant submits that if the DRS determines the Claimant’s loss of earnings is likely to be of a permanent nature and she establishes her identity and the continuance of her loss of earnings then weekly payment of statutory benefits are payable. The Claimant says she does not have to establish continuance of loss of earnings, as she has returned to work and makes no further claim. The Claimant submits she satisfies the permanent nature test on the basis she will never recover the claimed losses for the closed period. The Claimant submits the intention of the legislation is not for situations such as the Claimant’s, but to put limitations on people residing outside of Australia from claiming ongoing losses indefinitely, without sufficient evidence of the ongoing loss of capacity.

8.  The Insurer submits the Claimant’s claim is misconstrued in that she is claiming for loss of capacity not loss of earnings. The Insurer submits the Claimant was certified to return to part-time hours in April 2018, 3 months after the accident and resumed her pre-accident duties by 31 July 2018, some 7 months after the accident and that this does not suggest that her loss of earnings are permanent in nature.

Legislation

9.  In making my decision I have considered the following legislation and guidelines:

  • Motor Accident Injuries Act 2017 (NSW) (the Act)
  • Motor Accident Injuries Regulation 2017 (the Regulation)
  • Motor Accident Guidelines 2017 (the Guidelines)

Reasons

Whether the Claimant’s loss of earnings is likely to be of a permanent nature

10.  Section 3.21 provides (emphasis added):

(1)  An injured person who resides outside Australia is not entitled to receive any weekly payment of statutory benefits in respect of any period during which the person resides outside Australia, except as provided by this section when the loss of earnings in respect of which statutory benefits are payable is likely to be of a permanent nature.

(2)  An injured person residing outside Australia is entitled to receive on a quarterly basis the amount of the weekly payments accruing due during the preceding quarter if:

(a)  the Dispute Resolution Service has determined that the injured person's loss of earnings is likely to be of a permanent nature, and

(b)  the person establishes, in such manner and at such intervals as may be required by the Motor Accident Guidelines, the person's identity and the continuance of the loss of earnings in respect of which the weekly payment is payable.

11. The language of section 3.21 is “loss of earnings” not “loss of capacity”. An important distinction can be made between the terms: loss of earnings is a retrospective; loss of earning capacity is prospective. Loss of earnings refers to money the Claimant has already lost as a result of an injury. On the other hand, loss of earning capacity refers to the Claimant’s reduced ability to earn money in the future. The latter (loss of capacity) is addressed in the requirements of sections 3.6, 3.7, 3.8, 3.15 and 3.16 of the Act.

12. Section 3.21 is in effect, the gateway for the Claimant to have an entitlement to receive weekly payment of statutory benefits. Once she steps through that gateway she remains subject to the other provisions of Division 3.3 of the Act, which deal with the issue of earning capacity and fitness for work. For this reason, I do not agree with the Claimant’s submission that the intention of section 3.21 is to put limitations on people residing outside of Australia from claiming ongoing losses indefinitely, without sufficient evidence of ongoing loss of capacity. Any such claim for ongoing loss would remain subject to compliance with Division 3.3 of the Act, which addresses issues such as evidence of ongoing incapacity.

13. Whilst I am of the view an assessment of the Claimant’s capacity to work is not required by the test in section 3.21(2)(a), I do not accept the test is simply whether the Claimant has (or is likely to recover) the monetary loss of earnings. In my view, the question of whether the loss of earnings is likely to be of a permanent nature requires some consideration of the temporal nature of the loss. That is, whether the loss being suffered is temporary in the sense it is likely to cease in the near future, or whether it is likely to continue for an indefinite period and can therefore be considered permanent in nature.

14.  Although, in the general sense loss of earnings is a retrospective, the question in section 3.21(2)(a) is whether the loss “is likely to be of a permanent nature”. “Likely” suggests some prospective assessment is required. The phrase “of a permanent nature” also suggests something more (in the prospective sense) is required than simply whether the money has been or will be recovered. Nothing in section 3.21(2)(a) suggests the test is limited to whether the monetary loss is likely to be physically recovered. In my view, the test requires consideration as to whether the Claimant’s loss of earnings has characteristics which suggest the loss will likely be permanent, in the sense that it is not expected to change for an indefinite time.

The claim

15.  The Claimant’s claim can be divided into two parts:

(a)  A claim for the monetary amount of the sick leave taken from her employment; and

(b)  A claim for reduced variable pay, as a result of being confined to restricted duties for the first 2 to 3 months after the Claimant’s initial return to work.

Reimbursement of sick leave

16.   I agree with the Insurer’s submission in respect of this part of the claim, that the Claimant misconstrues her claim as one of loss of capacity rather than loss of earnings. Whilst the Claimant had no capacity for work from the date of the accident until 29 March 2018, the question is whether, as a result, she suffered a loss of earnings. As noted above, it is not necessary to assess capacity under section 3.21(2)(a).

17.  Pursuant to Schedule 1 of the Act “loss of earnings” means “a loss incurred or likely to be incurred in a person’s income from personal exertion”. However, the definition of “income from personal exertion” excludes “the monetary amount of any annual, sick or other leave entitlement”.

18.   Accordingly, the Claimant’s claim for the monetary amount of her sick leave is excluded under the Act. As the Claimant has already been compensated for her loss by way of sick leave entitlements, she has not suffered a “loss of earnings”.

19.   Even if it were not expressly excluded, I am of the view the Claimant has not suffered a loss of earnings that is likely to be permanent in nature on the basis the loss was temporary in nature, in the sense the Claimant ceased to incur the loss from on or about 29 March 2018 when she returned to work.

20.   Whilst the Claimant may have lost the benefit of accrued sick leave, I do not accept the intention of the Act is to recompensate the Claimant by way of statutory payments in speculation of a possible future need to take sick leave, particularly having regard to the usual way in which an employee will continue to accrue sick leave each year. To do so would be compensating for a loss of capacity, regardless of whether the Claimant suffered actual economic loss.

21.   I therefore find the Claimant has no entitlement to reimbursement of sick leave on the basis that:

(a)  It is excluded by virtue of the definitions of “loss of earnings” and “income from personal exertion” in Schedule 1 of the Act.

(b)  There has been no actual loss of earnings, given the availability of sick leave entitlements.

(c)   In any event, the loss cannot be characterised as “likely to be of a permanent nature” given it persisted for a temporary period of time only, of around 3 months.

Reduced variable pay

22.  The definition of “income from personal exertion” in Schedule 1 includes “…commissions, fees, bonuses, … allowances and gratuities received in the capacity of employee or in relation to any services rendered”. Accordingly, prima facie the Claimant’s “variable pay” is to be included as part of her loss of earnings.

23.  The Claimant’s pay records indicate some reduction in her gross monthly earnings for April, May, June and July 2018 in comparison to the previous year. The precise loss is unclear and would require further analysis of the pay records. However, the loss would appear to be somewhere in the vicinity of 60 to 100 GBP gross per week for the relevant period, based on the difference between the claimant’s average gross weekly income in 2017 and in 2018 (up until 30 November 2018). According to a schedule prepared by the Claimant, her variable pay was down by around 1,900 GBP for the relevant 4-month period (April to July 2018 inclusive) compared to the same 4-month period in 2017.

24.  The Claimant submits that as this is a loss she will never recover, it is a loss that is likely to be of a permanent nature for the purpose of section 3.21(2)(a). As noted above, I do not accept the submission that the loss is “of a permanent nature” simply because the Claimant will not recover the money. Whether there has been a financial recovery of the loss is not the test in section 3.21(2)(a). In my view, the test is whether the loss can be characterised as permanent in “nature” in the sense that it is a loss that is not likely to change for an indefinite period of time, or at least for the foreseeable future.

25. Based on the information before me, I conclude the Claimant’s loss of earnings is not likely to be of a permanent nature, as the evidence does not support a conclusion that the loss is not expected to change for an indefinite time. To the contrary, the loss spanned a short period and was therefore temporary in “nature”, rather than permanent in nature. The claimant ceased to incur the loss from on or about 30 July 2018 and on this basis, I do not consider that it can be characterised as “of a permanent nature”.

Conclusion

26.  For the above reasons, I am not satisfied the Claimant’s loss of earnings is likely to be of a permanent nature for the purpose of section 3.21(2)(b) of the Act. The Claimant is therefore not entitled to weekly payment of statutory benefits.

27.  My determination of the Other Matters dispute is as follows:

(a) Pursuant to section 3.21(2)(a) the Claimant’s loss of earnings as a result of the injury suffered in the motor vehicle accident on 11 January 2018 is not likely to be of a permanent nature. Accordingly, there is no entitlement to weekly payment of statutory benefits.

28.  Effective Date: 18 February 2019.

Katherine Ruschen
Decision Maker
Dispute Resolution Service