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ADZ v QBE Insurance (Australia) Ltd [2019] NSWDRS MR 103

Overview

Jurisdiction: Merit review

Catchwords: Weekly payments of statutory benefits – PAWE – pre-accident weekly earnings – salary increase – change in earning circumstances

Legislation cited:

  • Motor Accident Injuries Act 2017 (NSW) ss 7.12, 7.13, schedule 1 clause 4(1) & (2)
  • Motor Accident Injuries Regulation 2017
  • Motor Accident Guidelineseffective 15 January 2019

Parties:

  • ADZ – Claimant
  • QBE Insurance (Australia) Ltd– Insurer

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

Merit review certificate

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

The claim

  • Claimant:ADZ
  • Insurer:QBE Insurance (Australia) Ltd
  • Claim Number:360005323801

The reviewable decision

  • Decision-maker:Phinren Nop
  • Date of decision:14 December 2018
  • Nature of decision:Weekly payments of statutory benefits and the amount of pre- accident weekly earnings

The merit review

  • Our Reference:10078922
  • Merit Reviewer:Tami O’Carroll
  • Date of this Certificate:10 April 2019

My determination of the merit review is as follows:

  • The reviewable decision is set aside and the following decision is made in substitution for the reviewable decision:
    • The amount of ADZ’s pre-accident weekly earnings is $1,249.66.
    • This determination has effect from 5 June 2018.

Tami O'Carroll
Dispute Resolution Service Merit Reviewer

Reasons for decision

Background

1.ADZ was injured in a motor vehicle accident on 5 June 2018. At the time of the accident he was employed by XXX International (HK) Ltd.

2.By email dated 14 December 2018, the insurer advised ADZ that it had calculated his pre- accident weekly earnings (PAWE) at HKD$6,098.46, which converted to AUD$1,1036.74 (using a conversion rate of $0.17). ADZ sought review of that decision.

3.In an internal review decision dated 21 January 2019, the insurer calculated ADZ’s PAWE at HKD$6,711.88, which converted to AUD$1,141.02, (again using a conversion rate of $0.17).

4. ADZ lodged an application for merit review with the Dispute Resolution Service (DRS) on 14 February 2019 disputing the insurer’s decision regarding the calculation of his PAWE. The application has been made in accordance with section 7.12(1) of the Act and the Motor Accident Guidelines (the Guidelines).

Documents and information

5. I have considered all documents provided and submissions made with the application and the reply and any further information that has been provided to the DRS. I am satisfied that all information has been exchanged between the parties.

Submissions

6.In the application for merit review, ADZ, through his legal representative, makes the following submissions:

  • At the time of the motor vehicle accident, he was employed by XXX. He received a salary increase which was effective from 1 May 2018. He earned HKD$33,080 in May 2018.
  • The Insurer’s finding that his salary increase occurred 6 weeks prior to the motor vehicle accident is not correct, it was 5 weeks; the increase was from 1 May 2018 and the accident occurred on 5 June 2018.
  • PAWE should be calculated in accordance with the monthly salary in the period after the salary increase and immediately prior to the accident, this was HKD$33,080 which calculated to HKD$7,633.84 per week when based on a 52 weeks year. This converts to AUD $1,297.75.

7. The insurer submits:

  • There is no dispute that the claimant is an earner and that he is entitled to receive statutory benefits.
  • ADZ received a pay rise that increased his earnings to HK$33,000 per month which was retrospective from 1 May 2018. There is also no dispute that clause 4(3), Schedule 1 of the Act has application. Further, there is no dispute that a conversion rate of $0.17 applies.
  • The dispute is as to the methodology applied to calculate PAWE.
  • The salary increase occurred 6 weeks prior to the accident. Evidence was provided of earnings up until the end of May and this showed ADZ earned $33,000 for the month of May 2018.
  • ADZ worked for 23 days in May, therefore HK$33,080 divided by 23 days equals a daily rate of HKD$1,438.26.
  • There was 5 work days immediately before the accident (in June) which gives a total of 28 working days. Therefore, ADZ’s PAWE is HKD$40,271.28 for the total period and HKD$6,711.88 per week ($40,271.28 divided by 6 weeks).
  • Using the agreed conversion rate of 0.17, this is AUD$ 1,141.02 per week (HKD$6,711.88 x 0.17).

Legislation

8.In conducting my review, I have considered the following:

  • Motor Accident Injuries Act 2017 (NSW) (the Act)
  • Motor Accident Guidelines effective 15 January 2019 (the Guidelines)
  • Motor Accident Injuries Regulation 2017 (NSW) (the Regulation)

Pre-accident weekly earnings

9. Clause 4(1) of Schedule 1 of the Act provides a definition of “PAWE” and the method of calculating PAWE in most instances; which is the weekly average of a claimant’s gross earnings over the 12 months immediately before the day of the motor accident.

10. However, subclause 4(2) provides different methods to calculate PAWE in specific circumstances. Subclause 4(2)(b) applies in circumstances where subclause 4(3) of Schedule 1 is satisfied. This is where:

“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.”

11. By letter dated 23 May 2018, XXX advised ADZ that he was to receive a salary increase which would take effect retrospectively from 1 May 2018. It is agreed between the parties that this was a significant change of ADZ’s earnings circumstances that resulted in him earning more on a regular basis and that subclause 4(2)(b) of Schedule 1 of the Act therefore applies. That subclause provides that in such circumstances PAWE means:

  • 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.

12. Applying the above, ADZ’s PAWE is the weekly average of his gross earning’s received from XXX for the period from 1 May 2018 (the retrospective date from when his salary increased) to 4 June 2018 (the day immediately before the motor accident) – this is a total of 5 weeks.

13. The Insurer appears to have made its calculation of PAWE based on a daily average rate using total gross earnings (include ADZ’s monthly base rate plus allowances) for the month of May 2018 and then multiplied this rate by the number of days worked during the period from 1 May - 4 June 2018.

14. ADZ’s legal representative has used ADZ’s total gross earnings from the month of May 2018 to calculate a yearly total and then divided that by 52 weeks to come to an average weekly figure.

15. I do not accept either the insurer’s approach of arriving at a figure of total earnings for the relevant period using an average daily rate for days worked during the relevant period or ADZ’s legal representative’s approach of using a relevant period of 52 weeks of earning. Neither is consistent with subclause 4(2)(b) of Schedule 1 of the Act which states that ADZ’s PAWE is the weekly average of his gross earnings for the 5-week period 1 May 2018 – 4 June 2018.

16. Further, both the insurer and ADZ’s legal representative have made their calculations based only on ADZ’s earnings for the month of May 2018. Both have failed to include earnings from 1-4 June 2018.

17. As indicated above, I consider that subclause (2)(b) requires that all gross earnings received by ADZ during the period 1 May – 4 June 2018 be totalled and then divided by 5 weeks, to reach a weekly figure.

18. The letter from XXX indicates that ADZ’s new annual salary, taking effect from 1 May 2018, is HKD$324,000 (or KH$27,000 per month). ADZ is paid per calendar month and his payslips indicate that in the months of May and June 2018 he received his monthly base salary of KHD$27,000 plus a single payment identified in his payslips as “allowance”. In May 2018, he received an allowance of HKD$6,080 and in June 2018, he received an allowance of HKD$1,280.02.

19. As the relevant period for the calculation of ADZ’s PIAWE includes the entire month of May 2018, his total gross earnings as shown in his payslips for this month, including his base salary (KHD$27,000) and allowances (HKD$6,080) for the month will be included. However, as earnings for only 4 days of the month of June are included, 1-4 June 2018, only a portion of the earnings he received in June 2018 should be included.

20. ADZ submits that he gets paid an allowance depending on the hours and shifts he works. He states that his allowances for June 2018 were particularly low as he was away for most of the month after the accident. Noting this submission and that the period under consideration only includes 1-4 June 2018, the Authority sought from the parties a breakdown of ADZ’s gross earning for June 2018 which indicated his earnings specifically for the period 1-4 June 2018.

21. The parties were advised that in the absence of such information the Authority proposed to calculate ADZ’s gross earnings for the period of 1-4 June 2018 by dividing his total earnings for the month of June 2018 by 30 days, to get an average daily rate of earnings, and use this figure for the 4 days of 1-4 June 2018. The parties were provided with an opportunity to provide submissions in respect of the above proposed approach.

22. The Insurer advised that it was not able to provide any information as to earnings for 1-4 June 2018, it noted that as it did not have such information when it made its decisions, it used calculations based on a daily rate. No further information or submissions have been received from ADZ or his legal representative.

23. Whilst I acknowledge that the correct and preferable approach would be to consider only earnings from 1-4 June 2018 and to include exact gross earnings for those days, in the absence of information specifically indicating ADZ’s earnings for this period, I consider that the above approach is the most reliable way to determine his earnings for the PAWE period based on the information that is available.

24. ADZ earned a total of HKD$27,559.98 in the month of June. He therefore earned a daily average of HKD$918.665 in the month of June (HKD$27,559.98 divided by 30 days in the month of June). He therefore earned a total of HKD$3,674.66 from 1-4 June 2018 (HKD$918.665 x 4 days).

25. ADZ earned a total of HKD$36,754.66 during the period from when his pay increase took effect to the day immediately before the motor accident (total earnings of HKD$33,080 for the month of May 2018 + earnings of HKD$3,674.66 for 1-4 June 2018).

26. The weekly average of ADZ’s gross earnings for this period is HKD$7,350.93 (HKD$36,754.66 divided by 5 weeks). The parties have agreed that a conversion rate of $0.17 should apply. Therefore, ADZ’s average earnings for the period is AUD$1,249.66 (HKD$7,350.93 x 0.17). I find this to be the amount of ADZ’s PAWE pursuant to subclause 4(2)(b) of Schedule 1 of the Act.

27. The Insurer’s decision in respect of the amount of ADZ’s PAWE is set aside and the above decision is made in substitution for that decision.

Determination

My determination of the merit review is as follows:

  • The reviewable decision is set aside and the following decision is made in substitution for the reviewable decision:
    • The amount of ADZ’s PAWE is $1,249.66.
    • Effective Date – The insurer’s decision about PAWE is a decision which is relevant to the calculation of weekly payments of statutory benefits payable from the date of the accident. It is the function of the DRS on merit review to arrive at the correct and preferable outcome in respect of the weeks covered by the reviewable decision that is referred for review. Accordingly, this determination has effect from 5 June 2018.

Tami O'Carroll
Dispute Resolution Service Merit Reviewer