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AES v Allianz Australia Insurance Ltd [2019] NSWDRS MR 122

Overview

Jurisdiction: Merit Review

Catchwords: Statutory benefits – PAWE – entitlement to payments of weekly statutory benefits – future PAWE entitlement – full time student – weekly earnings upon completion of studies

Legislation cited:

  • Motor Accident Injuries Act 2017 (NSW) ss 3.6, 6.3, 7.10, 7.11, 7.12, 7.13, Schedule 1 (5), Schedule 2
  • Motor Accident Injuries Regulation 2017
  • Motor Accident Guidelines effective 13 July 2018

Parties:

  • AES – Claimant
  • Allianz Australia Insurance 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: AES
  • Insurer: Allianz Australia Insurance Ltd
  • Claim Number: 75C000459

The reviewable decision:

  • Decision-maker: Jorgia Edwards
  • Date of decision: 6 March 2019
  • Nature of decision: The amount of statutory benefits payable under Division 3.3

The merit reviewer:

  • Our Reference: 10093754
  • Merit Reviewer: Tami O’Carroll
  • Date of this Certificate: 24 May 2019

Merit reviewer's determination

My determination of the merit review is as follows:

  • The reviewable decision is affirmed. AES’s pre-accident weekly earnings remain at $372.82.

Tami O’Carroll

Dispute Resolution Service Merit Reviewer

Reasons

Background

1. AES was injured in a motor vehicle accident on 15 April 2018. At the time of the accident she was undertaking a Bachelor of Teaching/Bachelor of Arts (Humanities). She also worked in between semesters at XXXXX.

2. In a letter dated 6 March 2019, the insurer advised AES that it had reviewed her “wage entitlement” and determined that she was not entitled to payments of weekly statutory benefits as she had not “demonstrated any loss of earnings as a result of the motor vehicle accident”.

3. AES sought an internal review of that decision. She submitted that she had to defer her University degree as a result of the accident and that she had not been able to work at XXXXX during the university holidays as she had done prior to the accident.

4. In an internal review decision dated 21 March 2019, the insurer accepted that AES had suffered a loss of earnings as a result of the accident and had an entitlement to weekly statutory payments under section 3.6 of the Act. It determined the amount of her pre-accident weekly earnings (PAWE) to be $372.82.

5. AES lodged an application for merit review with the Dispute Resolution Service (DRS) on 18 April 2019 seeking a review of the decision about the amount of her PAWE. She submits that the insurer should have applied clause 5 of schedule 1 of the Act when calculating her PAWE because she was a full-time student at the time of the accident.

6. The application has been made in time pursuant to section 7.12(1) of the Act and the Motor Accident Guidelines (the Guidelines).

Jurisdiction

7. The insurer submits that AES does not dispute the PAWE calculation in the internal review, which is in relation to her earnings from XXXXX. Rather, she is disputing a “future PAWE entitlement”. It submits that it was unnecessary to consider “the relevant student provisions” as they did not apply at the time they made either of their decisions and therefore this issue needs to be raised at first instance with the insurer and then proceed through an internal review process. The insurer submits that the DRS does not have jurisdiction to proceed with a merit review.

8. It is clear from AES’s application for merit review that she does not dispute the calculation of her PAWE at $372.82 in relation to her earnings from XXXXX Rather, she submits that her PAWE was calculated incorrectly as clause 5 of Schedule 1 of the Act should have been applied due to her status as a full-time student at the time of the accident.

9. Pursuant to section 7.12(1) of the Act a claimant may apply to the DRS for a review of a “reviewable decision” – defined in section 7.10 as a decision of an insurer about a “merit review matter”.

10. Clause 1 of Schedule 2 of the Act declares various matters to be “merit review matters”. By clause 1(a) of Schedule 2 “the amount of statutory benefits payable…under Division 3.3 (weekly payments of statutory benefits)” is declared to be a merit review matter. Therefore, a decision of an insurer about the amount of statutory benefits payable under Division 3.3 of the Act is a “reviewable decision".

11. Section 7.11(1) of the Act states:

"A merit review application may not be made in relation to a reviewable decision until the decision has been the subject of an internal review by the insurer under Division 7.3.”

12. On 6 March 2019, the Insurer determined that AES did not satisfy section 3.6(1) of the Act as she had not suffered a loss of earnings and therefore that she had no entitlement to weekly payment of statutory benefits under section 3.6 of the Act during the first entitlement period. For the reasons that follow, I am satisfied that this decision was a decision of an insurer about the amount of statutory benefits payable under Division 3.3 and therefore a “reviewable decision".

13. The Macquarie Dictionary defines the word “about” as:

“1. Of; concerning ; in regard to;

2. connected with;

…”

14. In order to arrive at a decision about the amount of weekly statutory benefits payable during the first entitlement period, section 3.6 essentially sets out a two-step process, 3.6(1) needs to be applied to determine if an entitlement under the section arises and then 3.6(2) is applied to quantify that entitlement. The decision made by the insurer on 6 March 2019 as to whether or not section 3.6(1) was satisfied, was a necessary first step in determining the amount of any entitlement AES had to payments of weekly statutory benefits under Div 3.3 during the first entitlement period. It was a decision concerning and connected with the amount of statutory benefits payable under Div 3.3 and therefore a “reviewable decision".

15. It is clear from the insurer’s findings and reasons on internal review that it considered the correctness of the “reviewable decision”. It set aside the original decision and made a new decision about the amount of statutory benefits payable to AES in substitution for that decision. As the reviewable decision has been the subject of internal review by the insurer, I am satisfied that section 7.11(1) of the Act is satisfied and the application for merit review of the reviewable decision is appropriately made.

16. The insurer’s submissions suggest that it was necessary for the issue of any “future PAWE entitlement” and the application of clause 5 of Schedule 1 of the Act to be raised as a discrete issue with the insurer at first instance and proceed through the internal review process before a merit review can proceed. I do not accept that submission. I consider that section 7.11(1) will be satisfied where the insurer had considered the correctness of the reviewable decision, for reasons set out above, I am satisfied that the insurer did this in its internal review decision.

17. In any event, it is clear from both the original reviewable decision and the internal review decision that the insurer considered AES’s status as a student and the potential application of clause 5 of Schedule 1 of the Act. The insurer extracts clause 5 of Schedule 1 of the Act in the original reviewable decision and the then refers to evidence received from AES’s university. It concludes “despite the accident or your deferring you still would not have been able to complete the required unites to graduate in 2018.” This supports that the insurer considered the potential application of the clause but determined it did not apply.

18. At paragraph 5 of the internal review, the insurer again refers to evidence which it finds supports that AES would not have completed her degree in 2018. In making its determination as to the amount of AES’s PAWE it was necessary for the insurer to consider the entirety of the relevant legislative provisions that may apply given AES’s circumstances. It was clearly aware of the fact that she was a student at the time of the accident, consideration of the application of clause 5 of Schedule 1 of the Act therefore became necessary. Therefore, if it was necessary for this discrete issue to have been raised with the insurer at first instance and then subject to internal review, I consider that it was.

19. I am satisfied that the reviewable decision has been the subject of an internal review by the insurer prior to the merit review application being made, as required under 7.11(1) of the Act.

Documents and Information

20. 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

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

  • She was studying a Bachelor of Teaching/Bachelor of Arts (Humanities) at the XX University at the time of the accident. She was forced to defer in week 7 of semester 1 of 2018 due to the accident and her resulting incapacity. She had completed 160 of the 320 points required to complete the degree at the time.
  • PAWE has been calculated incorrectly as no regard has been had to her status as a full- time student. The insurer does not anticipate a change in her earnings from the date of being employed upon completion of the course.
  • When assessing her PAWE, the insurer has not properly considered clause 5 of Schedule 1 of the Act. The Guidelines make provision for matters which are to be taken into account by the insurer when determining weekly payments. Clause 4.54 of the Guidelines sets out the factors that an insurer is to have regard to when making a decision regarding a student’s pre-accident weekly earnings.
  • AES’s PAWE would have increased substantially once she graduated. It is highly probable that she would have graduated by July 2019 and she should be taken to be a full-time earner from this date with PAWE calculated on the basis of weekly earnings she would have received upon completion of her teaching degree.
  • A letter from the Academic Registrar of XX University dated 9 April 2019 confirms that the minimum time for AES to complete her remaining credit points would be four semesters. AES was planning to undertake a summer semester (from November 2018 to February 2019) and is therefore likely to have graduated in July 2019 as semester one ends on 23 June 2019.
  • According to the Crown Employees (Teachers and Schools and related Employees) Salaries and Conditions Award 2017 the starting salary for a graduate teacher from 1 January 2019 is $68,929.
  • AES’s PAWE should therefore be calculated in accordance with clause 5 of Schedule 1 of the Act at $1,325.56.

22. The insurer submits:

  • AES originally claimed that she would have graduated in 2018. Enquiries made with her university revealed this was impossible. Consequently, AES’s PAWE was calculated based on work she had performed with XXXXX prior to the accident.
  • The evidence indicates that AES would not have completed her studies until the end of 2019 and the calculation of her PAWE therefore should not change.
  • AES is only entitled to have her PAWE calculated pursuant to clause 5 of Schedule 1 of the Act “from the time the person would have completed the course of studies in which the person was a full-time student”.
  • AES still had some of her second year and her whole third and fourth year subject loads to compete at the time of her accident which was in the first semester of 2018. She therefore would not have completed her studies until the end of 2019 at the earliest and this is if she did not fail and took a full subject load.
  • AES’s submissions that she would have been able to complete all of her course requirements by taking extra subjects in the summer semester in 2018/19 is not supported by evidence. Further, she had been completing an average of 2 subjects per semester – her assertion that she would have completed four subject every semester after the accident as well as the summer semester is therefore highly implausible. Clause 5 of Schedule 1 of the Act therefore does not apply.

Legislation

23. 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)

Issues in Dispute

24. On internal review, the insurer found that AES is an earner who was injured as a result of a motor accident and suffered a total or partial loss of earnings as a result of the injury and therefore that she has an entitlement to weekly statutory payments. There is no dispute in relation to these findings.

25. It determined AES’s PAWE to be $372.82 based on her employment with XXXXX. There is no dispute in respect of the calculation of earnings received by her as an earner with XXXXX. Rather the dispute is as to whether clause 5 of Schedule 1 of the Act should have been applied so that AES’s PIAWE should have been calculated based on the earnings she would have received upon being employed on the completion of her teaching degree.

Pre-accident weekly earnings (PAWE)

26. Clause 4(1) of Schedule 1 of the Act provides a definition of “PAWE” and the method of calculating PAWE in most instances:

  • 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

27. Clause 5 of Schedule 1 of the Act states:

  • 5 Pre-accident weekly earnings of students

  1. If a person injured as a result of a motor accident was at the time of the accident a full-time student:

(a)  the person is taken to be an earner on and from the time the person would have completed the course of studies in which the person was a full-time student and has attained the age of at least 15 years, and

(b) the person's pre-accident weekly earnings from that time are to be calculated on the basis of the weekly earnings that the person would have received upon being employed on the completion of the course of studies in which the person was a full-time student.

...

28. The issue for determination in this matter is essentially whether the insurer should have applied clause 5(1)(b) of Schedule 1 of the Act and calculated AES’s PAWE based on the weekly earnings that she would have received upon being employed on the completion of her studies.

29. AES deferred her studies after the motor accident. At the time of deferral, she was part way through semester 1 of 2018 and had completed 160 of the 320 points required to complete the degree.

Reasons

30. AES argues that her PAWE would have increased substantially once she graduated and that from the date she expected to graduate her PAWE should be calculated based on weekly earnings she would have received upon completion of her teaching degree.

31. There essentially appears to be no disagreement between the parties that clause 5(1)(b) of Schedule 1 of the Act applies from the time AES would have completed her course of studies. The dispute is in relation to when this clause should be applied.

32. AES argues it is probable that she would have graduated by July 2019 and from this date her PAWE should be calculated based on weekly earnings she would have received upon completion of her teaching degree. The Insurer argues that AES would not have completed her studies until the end of 2019 and the calculation of her PAWE therefore should not change.

33. A letter from Ms KB (Academic Registrar and Director at XX University) dated 9 April 2019 confirms that AES was enrolled in a Bachelor of Teaching/Bachelor of Arts (Humanities) at the time of her injury. AES commenced the degree on 3 February 2014 and had completed 160 credit points, with 160 left to complete.

34. Ms KB states that at the XX University a full-time load is a minimum of 30 credit points per semester. I note that it is not clear from the letter exactly how many credit points AES was enrolled to undertake when the accident occurred.

35. The letter states:

“the minimum time require[d] in order to complete the remaining 160 credit points would be four (4) semesters…

The expected minimum time required for completion is calculated on the basis that the student will take the maximum load of 40 credit points per semester on standard academic progression – that is with no fails.”

36. AES submits that she had planned to take on a full-time course load in the semesters following her accident as well as undertaking some subjects during the summer semester. However, there is little evidence put forward in support of this.

37. In previous years, AES averaged completion of 2 subjects per semester. Given this and the view expressed in the letter above, the view put forward by the Insurer; that AES would have graduated at the earliest in late 2019, seems more plausible.

38. On any view, it is clear that AES would not have completed her studies at the time the insurer made the reviewable decision or as at the date of this determination. Pursuant to clause 5(1)(b) of Schedule 1 the Act, it is only “from that time” that AES’s PAWE should be calculated based on earnings that she would have received upon being employed on the completion of her course of studies.

39. I am therefore satisfied that the correct and preferable decision is that the insurer was correct in not calculating AES’s PAWE pursuant to clause 5(1)(b) of the of Schedule 1 of the Act as it had no application at the time they made the reviewable decision. The clause still has no application as at the date of this determination. Therefore, my determination of the merit review matter is that the Insurer’s decision is affirmed. AES’s pre-accident weekly earnings remain at $372.82.

40. However, I do consider that the insurer will be required to make a further decision considering the application of clause 5 of Schedule 1 of the Act at such time as AES would have completed her course of studies. The duty of the insurer to act with good faith as set out in section 6.3 of the Act, would require that such a decision be made promptly thereafter.

Determination

My determination of the merit review is as follows:

  • The reviewable decision is affirmed. AES’s pre-accident weekly earnings remain at $372.82.

Tami O’Carroll

Dispute Resolution Service Merit Reviewer