CERTIFICATE OF DETERMINATION OF MERIT REVIEWER	
	
Citation:	Khalil v Allianz Australia Insurance Limited [2023] NSWPICMR 20	
		
ClaimanT:	Mathew Greg Carlo Khalil	
		
Insurer:	Allianz Australia Insurance Limited	
		
Merit Reviewer:	Katherine Ruschen	
		
DATE OF DECISION:	31 March 2023	
		
CATCHWORDS:	MOTOR ACCIDENTS - Motor Accident Injuries Act 2017; merit review; dispute about payment of weekly benefits under Division 3.3; meaning of pre-accident weekly earnings (PAWE); Schedule 1, clause 4; whether change in earning circumstances, when change occurred; clause 4(3), clause 4(2)(b); when earner began earning continuously; clause 4(2)(a); sole trader; business expenses; earnings received as an earner; Held – the reviewable decision is affirmed.	
		
Determinations made: 	CERTIFICATE OF DETERMINATION
Issued under s 7.13(4) of the Motor Accident Injuries Act 2017
The reviewable decision is about  the amount of weekly payments of statutory benefits that are payable under Division 3.3 of the Motor Accident Injuries Act 2017 (the MAI Act), and is therefore a merit review matter under Schedule 2(1)(a) of the MAI Act.
1.	The reviewable decision is affirmed.	

STATEMENT OF REASONS
INTRODUCTION
1.	Mathew Greg Carlo Khalil (the claimant) was involved in a motor accident on 
13 May 2022.
2.	The claimant lodged an application for personal injury benefits under the Motor Accident Injuries Act 2017 (the MAI Act).
3.	On 15 December 2022 the insurer determined the claimant’s pre-accident weekly earnings (PAWE) in the amount of $6.47.
4.	The claimant requested an internal review of the PAWE decision.
5.	On 29 December 2022 the insurer issued their internal review decision in which the claimant’s PAWE amount was varied to nil.
6.	The claimant has requested a merit review of the insurer’s internal review decision dated 29 December 2022.
SUBMISSIONS 
7.	The claimant submits that PAWE falls for assessment under Schedule 1, cl 4(2)(b) of the MAI Act on the basis there was a significant change in the claimant’s earning circumstances pursuant to cl 4(3). The claimant submits that from 17 February 2022 he began regularly earning $1,500 gross per week as an Uber Eats delivery driver, which was more than he had been previously earning in this role.
8.	The insurer submits there has not been a significant change in earning circumstances having regard to the claimant’s earnings in the same role prior to 17 February 2022. The insurer submits PAWE falls under cl 4(2)(a) on the basis the claimant began earning continuously from 9 August 2021 when he commenced working for Uber Eats. The insurer further submits that as a self-employed earner the expenses of the claimant’s business must be deducted from the gross profits of the business to produce the claimant’s gross earnings from the business. 
REASONS
Issues
9.	The issues for determination are:
(a)	whether the claimant’s PAWE falls under Schedule 1, cl 4(2)(a) or cl 4(2)(b), and
(b)	whether the claimant’s gross earnings as an earner are the gross profit of the business or the net profit of the business, after deducting the expenses of the business.
Legislation 
10.	There is no dispute that the claimant is an earner within the meaning of the MAI Act.
11.	The dispute is about whether cl 4(2)(a) or cl 4(2)(b) applies. 
12.	The meaning of PAWE is relevantly set out in Schedule 1, cl 4 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 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) …
(b)	if subclause (3) applies—the weekly average of the gross earnings the earner received as an earner, or could reasonably have been expected to receive, during the 12 months after the change of circumstance referred to in the subclause occurred,
(c)	...
(2A) ...
(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.
(4)	For the purposes of this clause, an earner earns continuously if he or she obtains earnings from permanent employment or from a source that, on the day of the motor accident, was likely to continue for a period of at least 6 months to provide earnings to the earner on the same, or a similar, basis to the basis on which the earnings were being provided as at that day.”
Does cl 4(2)(b) apply? 
13.	The claimant commenced working as an Uber Eats delivery driver on a self-employed/sole trader basis from 9 August 2021. 
14.	From 13 November 2021 to 16 February 2021 the claimant took time off work to travel overseas. He resumed his work as a delivery driver on 17 February 2022.
15.	The claimant alleges there was a “significant change” under cl 4(3) of the MAI Act on 17 February 2022 because from this date he regularly began to earn $1,500 gross per week. However, whilst regularly earning, or becoming entitled to earn more is just one criteria of cl 4(3) there must also be an “action taken by” the claimant that resulted in a “significant change” which in turn resulted in the claimant regularly earning more. 
16.	Clause 4(3) provides examples of events that would amount to a significant change for the purpose of cl 4(3) and includes 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”. Whilst this is not intended to be an exhaustive list it indicates that a specific event needs to be identified (brought about by an “action taken by the earner”) which resulted in the increase in earnings. 
17.	Other than to assert his earnings increased from 17 February 2022 the claimant has not identified any particular action taken by him or any event that would amount to a “significant change”. The claimant did not change jobs, he did not take up a promotion and did not move from part-time to full-time employment. There is also no evidence of an increase in the rate of pay he received from Uber Eats. There is no other evidence to suggest any other action taken by the claimant that might be described as resulting in a significant change to his earning circumstances.
18.	As to the suggestion that earnings increased from 17 February 2022:
(a)	the claimant was self-employed and as such, receives no pay if he takes a leave of absence from work by reason of sickness, holiday, carer’s responsibilities, family emergency or for any other reason, and
(b)	the nature of self-employment is that earnings typically fluctuate from week to week or month to month.
19.	Payment summaries issued by Uber Eats demonstrate that consistent with the nature of self-employment the claimant’s earnings fluctuated both before and after 
17 February 2022, as follows:
Period	Gross business earnings	No. of weeks 	Average weekly earnings 	
9 to 30 August 2021	$5,554.47	3.14	$1,768.94	
31 August to 27 September 2021	$6,596.94	4	$1,649.24	
28 September to 1 November 2021	$6,561.61	5	$1,312.32	
2 November to 12 November 2021	$417.30	1.57	$265.80	
28 February to 28 March 2022	$5,828.41	4.14	$1,407.83	
29 March to 2 May 2022	$7,052.81	5	$1,410.56	
3 May to 13 May 2022	$2,468.64	1.57	$1,572.38	

20.	As can be seen from the above table the claimant’s contention earnings significantly increased from 17 February 2022 is not supported by the documentary evidence. The documentary evidence demonstrates that the claimant’s earnings upon resuming work in February 2022 were reasonably consistent with his earnings prior to going overseas on 13 November 2021. In fact, the claimant earned more on average each week in the months of August and September 2021 than he did in the three months from February to May 2022. 
21.	Accordingly, even if the claimant was able to point to a particular “action taken by” him resulting in a “significant change” the evidence establishes the claimant did not regularly earn more or become entitled to regularly earn more after 17 February 2022 than he had previously been earning in the same employment. 
22.	It is clear the claimant’s earnings fluctuated both before and after 17 February 2022. Contrary to the claimant’s contention he consistently earned $1,500 per week from 
17 February 2022 the evidence establishes in some weeks since 17 February 2022 the claimant’s earnings were significantly less than this. For example, in the week from 7
to 14 March 2022 the claimant only earned $697.73, in the week from 18 to 
25 April 2022 earnings were only $656.04 and in the week from 25 April to 2 May 2022 earnings were only $834.28.
23.	In contrast, as shown in the above table the weekly average in the months of August and September 2021 exceeded the weekly average in the period February to 
May 2022. 
24.	I am therefore not satisfied on balance that there was a significant change in the claimant’s earning circumstances on or after 17 February 2022 to trigger cl 4(3) and in turn, cl 4(2)(b) because:
(a)	the claimant has not pointed to any action taken by him or identified the “significant change” that allegedly occurred, and/or
(b)	in any event, the evidence establishes the claimant’s average weekly earnings after 17 February 2022 were reasonably consistent with his weekly average in the months prior to his overseas travel on 
13 November 2021 and if anything, the weekly average was less than the weekly average prior to 13 November 2021.
25.	Accordingly, cls 4(3) and 4(2)(b) do not apply.
PAWE under cl 4(2)(a) 
26.	The pre-accident period under cl 4(1) is 13 May 2021 to 12 May 2022. Clause 4(1) applies unless one of the exceptions in cl 4(2) apply. I have already determined above that the exception to cl 4(1) in cl 4(2)(b) does not apply. 
27.	There is no evidence that any of the other exceptions under cl 4(2) might apply other than cl 4(2)(a). In this regard, there is no evidence upon which one might be comfortably satisfied that the claimant was not earning prior to 9 August 2021 and more specifically, was not earning at any time in the period 13 May 2021 to 
8 August 2021. 
28.	However, the insurer has accepted that cl 4(2)(a) applies based on evidence the claimant commenced with Uber Eats on 9 August 2021 and the claimant’s tax return indicates the only active income received by the claimant in the period 1 July 2021 to 30 June 2022 was the Uber Eats earnings received from 9 August 2021. The tax return of course does not account for the whole of the pre-accident period under cl 4(1). The evidence is silent as to whether the claimant received any earnings in the period 
13 May 2021 to 30 June 2021 such that cl 4(1) might apply. However, the insurer has accepted that cl 4(2)(a) applies and I will therefore proceed on this basis.
29.	Under cl 4(2)(a) the claimant’s PAWE is “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”. Accordingly, the claimant’s PAWE is the weekly average of the gross earnings he received from 
9 August 2021 to 12 May 2022. 
30.	The insurer has made clear in the internal review decision and their submissions in this merit review that the insurer’s position is that expenses of the business must be deducted from the gross profit of the business for the purpose of calculating the claimant’s PAWE. 
31.	The claimant is legally represented and despite the above, the claimant’s submissions ignore the issue of business expenses. However, I shall infer from the claimant’s contention that his PAWE should be $1,500 which is more or less the weekly average of the gross profit of the business that the claimant’s position is that business expenses should not be deducted.
32.	The starting point is that the claimant’s business earned a gross profit of $33,537 in the period 9 August 2021 to 12 May 2022, as declared by the claimant in his 2021/2022 tax return and as evidenced by the Uber Eats payment summaries.
33.	Business expenses incurred to generate this profit total $36,536, as declared by the claimant in his tax return This results in a net loss of the business of $2,999, as declared by the claimant in his tax return. As such, the net profit of the business is nil. 
34.	Schedule 1, cl 4(2)(a) requires a determination of the claimant’s gross earnings received as an individual “earner” and not the gross earnings of the business itself. In so far as the claimant earns from the proceeds of the business, the “proceeds” received by the claimant as an “earner” are the net income of the business after accounting for all business expenses incurred to run the business, but before tax. Business expenses are not “proceeds” of the business that make it into the claimant’s hands as his “gross earnings”.
35.	As noted, the claimant’s submissions are silent on the question of business expenses and accordingly, it is not clear whether this is in dispute or whether the business expenses were inadvertently ignored when the claimant submitted his PAWE is $1,500 based on gross profit of the business. For the avoidance of doubt, I have addressed this issue and have concluded for the above reasons that business expenses must be deducted from gross profit of the business for the purpose of calculating PAWE.
36.	My conclusion that the claimant’s gross earnings from the business are the net profit of the business after deducting business expenses is consistent with the method of calculation in previous merit review decisions including ABQ v NRMA (Merit Review) [2018] NSWSIRADRS 43 (17 October 2018), ACL v CIC Allianz Insurance Limited [2018] NSWDRS MR 064; AJQ v NRMA (Merit Review) [2020] NSWSIRADRS 44 (8 April 2020), APD v AAI Limited trading as GIO (Merit Review) [2020] NSWSIRADRS 198 (24 August 2020), APL v GIO (Merit Review) [2020] NSWSIRADRS 207 (16 September 2020), Mula v NRMA [2022] NSWPICMR 9, Hayes v GIO [2022] NSWPICMR 17, Le v Insurance Australia Ltd t/as NRMA Insurance [2022] NSWPICMR 47 and Shqau v AAMI [2022] NSWPICMR 6 and a number of other recent decisions of the Commission.
37.	The reasons set out in the above mentioned decisions should be read as also being the reasons for reaching this conclusion in this matter.
38.	My conclusion is also consistent with conventional accounting practices and the claimant’s declarations to the Australian Taxation Office (ATO). A party such as the claimant cannot have it both ways that is, they cannot declare to the ATO a loss for the purpose of minimising their tax liability under taxation legislation and then manipulate that information for the purpose of a claim for personal injury benefits to maximise their benefits under the MAI Act. By the very nature of the claimant’s declaration to the ATO the information in the claimant’s tax return is taken to be true and correct, being that the claimant did not receive any earnings as an individual earner from his business in the period 9 August 2021 to 12 May 2022.
39.	Accordingly, if the period under cl 4(2)(a) is from 9 August 2021 to 12 May 2022 the claimant’s gross earnings received as an earner are nil because the business made a loss in this period. As a result, there was no net profit available to the claimant as the proceeds of the business. This in turn means the claimant’s PAWE is nil because he did not receive any proceeds from the business in the period under cl 4(2)(a) from 
9 August 2021 to 12 May 2022.
40.	There is a question as to whether the period under cl 4(2)(a) should commence from 17 February 2022 when the claimant resumed work after his overseas travel rather than from 9 August 2021 when he first commenced working as an Uber Eats delivery driver.
41.	Regard should be had to the definition of earning “continuously” set out in cl 4(4) which provides:
“For the purposes of this clause, an earner earns continuously if he or she obtains earnings from permanent employment or from a source that, on the day of the motor accident, was likely to continue for a period of at least 6 months to provide earnings to the earner on the same, or a similar, basis to the basis on which the earnings were being provided as at that day.”
(emphasis added)
42.	As a self-employed earner the claimant’s earnings are likely to fluctuate for a variety of reasons. This might include, among other things, a downturn in work, or because of inclement weather, or because the claimant takes annual or other leave or because of an industry shut down (for example, the traditional Christmas shutdown period in the construction industry). This is the nature of being self-employed. In my view, such interruptions should not result in the clock as to when an earner begins to earn continuously effectively re-starting each time after such a break from work. 
43.	If periods of no income from a sole trader business because the sole trader travels overseas or takes leave of absence for any other reason were quarantined from PAWE it would distort the likely true average weekly earnings and likely result in enrichment to the earner. 
44.	In my view, the claimant commenced earning continuously from 9 August 2021, as from this date he began to obtain earnings from a source that was likely to continue for a period of at least six months to provide earnings on the same, or a similar basis. The claimant’s earnings were only interrupted because he travelled overseas and was then required to isolate for a period on his return. 
45.	As noted above, the nature of self-employment is that a self-employed person will not be paid for time off work, whatever the reason. It can be reasonably assumed that in any self-employment the business owner will be away from work for periods of time similar to allowances made for sick leave (approximately 10 days per year), annual leave (four weeks per year) and public holidays (approximately 10 days per year) in permanent full-time employment. There may also be instances where an earner takes leave of absence for other reasons such as an extended holiday or for unexpected circumstances such as a family emergency. Accordingly, to suggest a self-employed person earning say $1,500 on average each week would earn this each and every week in a 52 week period is not likely to be a realistic depiction of the person’s weekly average over a full 12 months, as in some of these weeks they likely would not earn due to taking leave of absence from their work. 
46.	In my view, the claimant’s overseas travel from 13 November 2021 to 
16 February 2022 (including any government mandated isolation period) is just one example of a self-employed person taking leave of absence from work and therefore does not interrupt the period of continuous earnings. This is consistent with Allianz Insurance Australia Limited v Shahmiri [2022] NSWSC 481 (Shahmiri). Whilst Shahmiri dealt with an interruption in employment under Schedule 1, cl 4(1) the reasoning in Shahmiri is equally applicable to cl 4(2)(a). 
47.	The above stated, even if the period under cl 4(2)(a) should be 17 February 2022 to 
12 May 2022 the claimant’s PAWE would be the same that is, nil. This is because it can be reasonably inferred from the nature of the business that the expenses of the business are incurred on a reasonably consistent basis that is, when the business is earning ongoing expenses are incurred in order to generate the business earnings each week or month. The claimant’s business expenses represent 109% of the gross profit of the business. 
48.	The gross profit of the business from 17 February 2022 to 12 May 2022 was $15,349.86. The business incurred expenses at the rate of 109% of gross profit. Accordingly, on balance it is likely business expenses in the same period were $16,731 (109% of gross profit of $15,349.86). This results in a net loss in the period 
17 February 2022 to 12 May 2022 of $1,382. Accordingly, the claimant’s PAWE would be nil, even if it were calculated over the period 17 February 2022 to 12 May 2022.
49.	For completeness I note that it follows from the above that if cl 4(2)(b) were to apply, the claimant’s PAWE would also be nil under cl 4(2)(b). 
CONCLUSION
50.	For the reasons set out above:
(a)	I conclude cl 4(3) is not triggered and therefore cl 4(2)(b) does not apply;
(b)	I have assessed the claimant’s PAWE under cl 4(2)(a);
(c)	business expenses must be deducted from the gross profit of the business to produce the gross earnings of the claimant;
(d)	the relevant period under cl 4(2)(a) is 9 August 2021 to 12 May 2022;
(e)	the claimant’s gross earnings received as an earner in this period total nil because the business made a loss, leaving no proceeds available as earnings for the claimant; 
(f)	the claimant’s PAWE is therefore nil ($0 divided by 39.5 weeks), and
(g)	even if the relevant period under cl 4(2)(a) (or cl 4(2)(b)) is the shorter period from 17 February 2022 to 12 May 2022 the claimant’s PAWE is nil because the evidence establishes on balance:
(i)	business expenses were incurred at a rate of 109% of gross profit;
(i)	at 109% business expenses exceeded gross profit at all material times, and
(i)	the business therefore made a loss in this period meaning that there were nil proceeds of the business available as earnings for the claimant. 
51.	Accordingly, the reviewable decision is affirmed. 
LEGISLATION AND GUIDELINES
52.	In making this decision, I have considered the following:
•	the application, reply and supporting documentation;
•	the MAI Act; 
•	Motor Accident Guidelines, and
•	Motor Accident Injuries Regulation 2017.