Does a company’s registration sufficiently demonstrate that a Claimant is “an earner”? Alzate v Insurance Australia Limited t/as NRMA [2023] NSWPICMR 51

In Brief

• The onus is on the Claimant to demonstrate that they are “an earner” in order to access the weekly payments contemplated by Division 3.3 of the Motor Accident Injuries Act 2017 (MAIA).
• The Claimant is not “an earner” if their circumstances do not meet the requirements of clause 2 of Schedule 1 of MAIA.
• Within the meaning of clause 2(b) of Schedule 1 of MAIA, a Claimant has not entered into an arrangement to commence “self-employment” where they have set up a company – because the company is a separate legal entity from the Claimant.

Facts

On 18 October 2023 the NSW Personal Injury Commission released its decision in Alzate v Insurance Australia Limited t/as NRMA [2023] NSWPICMR 51. The Claimant in this matter was unemployed on the date of her motor accident and was receiving parenting benefits through Centrelink.

The Claimant alleged that she had been taking steps to start her own business in the weeks leading up to the accident and that she had work “lined up” for the post-accident period. She provided documents showing that a company had been registered 10 days before the accident and that the company had a:

• tax file number;
• business name;
• bank account; and a
• mobile phone connection.

The Claimant claimed that the injuries she sustained in the motor accident prevented her from pursuing the business.

The Insurer determined that there was insufficient information to assess whether the Claimant was “an earner” as defined by clause 2 of Schedule 1 of MAIA and, even if she was, there was insufficient information to assess her pre-accident weekly earnings (PAWE). As such, the Insurer paid the Claimant an interim benefit pursuant to s 3.6(5) of MAIA, which ceased after the first entitlement period.

The Claimant sought merit review.

Merit Reviewer Reasons

A Claimant is only entitled to weekly benefits for the first two entitlement periods – pursuant to ss 3.6 and 3.7 of MAIA – if they meet the statutory definition of “an earner” in clause 2 of Schedule 1 of MAIA.

Clause 2(b) of Schedule 1 of MAIA provides that a Claimant is “an earner” if they had, before the accident, entered into any arrangement to either:

• Commence employment with an employer at a particular time and place, or
• Commence business as a self-employed person at a particular time and place.

The Merit Reviewer found that the Claimant was not “an earner” for the following reasons:

1. There was insufficient evidence connecting the Claimant to the company which had been registered 10 days prior to the accident.
2. Even if the Claimant registered the company, the Claimant did not “enter into an arrangement to commence business as a self-employed person” because she and the company were separate legal entities.
3. There was no evidence that the Claimant would be employed by the company at a particular time and place.

The Merit Reviewer also agreed with the Insurer that even if the Claimant was “an earner”, there was insufficient information to calculate her PAWE given that no information had been provided regarding what revenue the company would generate, or how the Claimant would be paid.

The Merit Reviewer therefore affirmed the decision under review.

Key Learnings

The decision in Alzate v Insurance Australia Limited t/as NRMA [2023] NSWPICMR 51 reminds us that a Claimant is not “an earner” unless the statutory definition outlined in clause 2 of Schedule 1 of MAIA is strictly met.

The decision also acts as a useful reminder more generally that a company is a separate legal entity to a Claimant.

If the Claimant is setting up a company when an accident intervenes, the onus is on the Claimant to demonstrate both:

• that they are (or will be) employed by the company; and
• what their earnings would be if the accident had not occurred.

If you have a query relating to any of the information in this case note, or would like to discuss a similar matter of your own, please don’t hesitate to get in touch with CTP Insurance Principal Peter Hunt today.