In Brief
- Pre-accident weekly earnings (PAWE) are calculated by reference to the earnings received by the Claimant, as an individual, rather than any profits generated by the Claimant's company.
- The Motor Accident Injuries Act 2017 (MAIA) does not recognise the concept of "constructive earnings".
- If the Claimant's company did not pay then a salary, or any other income, then their PAWE is $Nil.
Facts
The Personal Injury Commission (PIC) published its decision in Klironomos v Insurance Australia Limited t/as NRMA Insurance [2025] NSWPICMR 17 on 6 June 2025.
The Claimant was injured in a motor accident on 2 August 2024. He subsequently made a claim for weekly benefits pursuant to Part 3.3 of MAIA.
A dispute arose, however, regarding whether the Claimant earned any personal exertion income in the 12 months prior to this accident.
The parties agreed that the Claimant worked as a concrete truck driver in the relevant period prior to his accident. A complication arose, however, due to the corporate structure the Claimant had set-up.
The Claimant was the sole director, secretary and shareholder of a company (the Claimant's company). The company contracted with another company (the head contractor) for the Claimant to drive a concrete agitator truck and make deliveries of concrete. The Claimant's company acted as trustee of a trust (the Claimant's trust). The head contractor paid the Claimant's company for the work the Claimant performed.
Importantly, there was no evidence that any monies were ever paid to the Claimant (as a legal entity distinct from both the Claimant's company and the Claimant's trust).
The Insurer, therefore, assessed the Claimant's pre-accident weekly earnings at $Nil. The decision was affirmed on Internal Review.
The Claimant sought a Merit Review.
The Merit Reviewer's Decision
The Merit Reviewer agreed that the Claimant's PAWE was $Nil for the following reasons:
- Whilst the Claimant was the "heart and soul" of the business, the Claimant's company was a separate legal entity from him.
- The business carried out for the head contractor was performed by the Claimant's company, not the Claimant.
- Payments made under the contract were made to the Claimant's company and any income, profit or earnings received in performance of the contract belonged to the Claimant's company.
- Payments made by or on behalf of the Claimant's Trust were made at the direction of the Claimant's company as trustee for the Claimant's trust and were not made at the direction of the Claimant.
- There was no evidence that the Claimant received any salary, wages, commissions, fees, bonuses, allowances or gratuities from the Claimant's company in his capacity as an employee.
- The statutory scheme does not recognise the concept of "constructive earnings", advanced on behalf of the Claimant by his legal representatives.
- Given that there was no evidence of the Claimant receiving any earnings from his company, his PAWE was $Nil.
Why This Case is Important
At Common Law, a Claimant who operates a business through a partnership or a company, may argue that the total profits of the partnership or the company represent their pre-accident earning capacity, on the basis that they are the heart and soul of the business and the partnership or the company would generate no profits without their labour – see Husher v Husher (1999) 197 CLR 138.
Common Law principles, however, have limited relevance to the calculation of PAWE.
PAWE is assessed purely according to the statutory formulae set out in clause 4 of Schedule 1 to MAIA. The only relevant case law is case law which interprets the words in the statutory formulae.
The decision inKlironomos highlights, yet again, that the PIC will only consider earnings received in the Claimant's hands, as an individual, when it calculates their PAWE. Income generated by a company is irrelevant to the calculation of PAWE, even where the Claimant is the sole director and shareholder of the company and even where the Claimant provides all the labour the company supplies under a contract to a third party.
In this case, the Claimant's PAWE was assessed at $Nil because there was no evidence that the company paid the Claimant any income. If, for example, the company had paid the Claimant a salary, his PAWE may have been calculated by reference to that salary.
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