Calculation of PAWE – can earnings be constructively received where the person who generates income directs the earnings to another legal entity or person?

Klironomos v Insurance Australia Limited t/as NRMA Insurance [2025] NSWPICMR 17

This merit review dispute concerned the amount of the claimant’s pre-accident weekly earnings (PAWE) for the purpose of calculating his weekly benefits under the Motor Accident Injuries Act 2017 (NSW) (MAIA).

The claimant was injured in a motor vehicle accident on 2 August 2024. Leading up to the accident, he was the sole director, secretary and shareholder of a trustee company that contracted with another company to provide a concrete truck. The claimant drove the concrete truck and made deliveries as required by the contract.

The insurer, represented by Hall & Wilcox, had made a decision that assessed the claimant’s PAWE as nil, and maintained that was correct. This was because the net proceeds of the business were not distributed from the claimant’s trustee company to him, but was instead paid to third parties at his direction, and therefore no earnings were received by him within the meaning of Schedule 1, clause 3 of the MAIA during the relevant pre-accident period.

The claimant argued that income paid to third parties at his direction constituted earnings that were ‘constructively received’ by him.

Senior Member Williams affirmed the insurer’s decision, finding that the business income belonged to a separate legal entity to the claimant, and that the claimant did not actually receive any earnings during the relevant pre-accident period. The claimant’s argument that tax law concepts such as ‘constructive receipt’ could apply was rejected.

This decision shows that even though a person generates a stream of income from personal exertion, that income is not earnings ‘received’ by them within the meaning of Schedule 1, clause 3 of the MAIA unless the income is received by that person rather than a separate legal entity such as a trust.