Allianz Australia Insurance Ltd v Motor Accidents Authority NSW & 2 Ors

Judgment 1Heung Ju Cha suffered physical and psychiatric injuries in two motor vehicle accidents, the first on 7 February 2004 and the second on 21 October 2005. He pursued claims for damages through the Claims Assessment and Resolution Service (CARS) administered by the Motor Accidents Authority of New South Wales pursuant to the Motor Accidents Compensation Act 1999. Liability was not in issue in either case. The compulsory third party insurer in respect of the first accident was NRMA Insurance Limited (NRMA), and for the second accident was Allianz Australia Insurance Ltd (Allianz). 2For the purpose of each claim, it was necessary to determine whether Mr Cha had suffered the degree of permanent impairment required to enable an award for non-economic loss, that is, more than 10%: s 131 of the Act. There being a dispute about that issue in each case, the matter was referred for medical assessment: s 132. Provision for medical assessment is to be found in Pt 3.4 of the Act (ss 57 ff). Pursuant to s 61, the Motor Accidents Authority referred the dispute to a psychiatrist, Dr Anthony Samuels. As the physical injuries caused by each accident did not exceed the 10% threshold set by s 131, the focus of the dispute was Mr Cha's psychiatric injuries. 3Dr Samuels assessed Mr Cha on 16 July 2008 and arrived at a diagnosis of major depression, arising from both accidents. He found a total whole person impairment of 19%, and certified accordingly on 24 July 2008. He did not apportion that impairment between the two accidents, and provided no reason for not doing so. 4Allianz sought a review of that medical assessment by a review panel of medical assessors, pursuant to s 63 of the Act. By subs (3A), that review is a fresh assessment and is not confined to aspects of the original assessment said to have been incorrect. The review panel considered material supplied to it, including submissions, by Mr Cha, NRMA and Allianz, and two members of the panel re-examined Mr Cha. The review was conducted on 30 July 2009. The effect of the panel's determination was that Mr Cha suffered from major depression with melancholia, leading to a whole person impairment of 26% arising from the second accident. The panel certified accordingly, providing written reasons for its decision. 5Allianz contends that the panel fell into error of law in its approach to the matter, and brings proceedings for judicial review in this Court. The first defendant is the Motor Accidents Authority, which has entered a submitting appearance. The second and third defendants are Mr Cha and NRMA respectively. 6The panel determined that it could not make an apportionment for each accident. Its findings were these. The first accident had caused the condition of major depression with melancholia. However, Mr Cha told his treating psychiatrist that he was starting to recover until the second accident, which exacerbated his condition. Nevertheless, in the days immediately prior to the second accident the psychiatrist observed him to be depressed and commenced him on what the panel described as "new and specific psychiatric treatment". As a result, the condition had not stabilised prior to the second accident and the degree of Mr Cha's permanent impairment at that time could not be determined. Accordingly, his whole person impairment was assessed on the basis of the injuries suffered in the second accident. 7In its reasons the panel expressed its findings in this way: "1. There was no pre-existing condition which caused a degree of permanent impairment prior to the first motor accident. 2. The condition of Major Depression arising from the injuries sustained in the first motor accident on 7 February 2004 had not stabilised at the time of the second and therefore it was not possible to make a determination of whole person permanent impairment prior to the second motor accident. 3. The condition of Major Depression with melancholia arising from the injuries sustained in the first motor accident is now stabilised. 4. The condition of Major Depression exacerbated by the injuries sustained in the second motor accident on 21 October 2005 is stabilised and therefore the whole person impairment as assessed by the panel is determined to be arising from the injuries sustained in the second motor accident alone." 8As I have said, the panel certified accordingly. In respect of each accident, certificates were issued as to whether the injuries caused by the accident had stabilised at the time of the panel's review and whether those injuries gave rise to a whole person impairment greater than 10%. In relation to the first accident, it was certified that the condition of major depression with melancholia had stabilised at the time of the review but that it did not give rise to a whole person impairment greater than 10%. In relation to the second accident, it was certified that the depressive condition had stabilised at the time of the review and that it gave rise to a whole person impairment greater than 10%. 9Section 65(1) of the Act provides that medical assessments, whether by an assessor or a review panel, are subject to relevant provisions of Medical Guidelines issued by the Motor Accidents Authority. Relevant to the present case are the Permanent Impairment Guidelines of 1 October 2007. By clause 1.2, they are said to be based in part on the 4 th edition of the American Medical Association publication, "Guides to the Evaluation of Permanent Impairment" (AMA 4 Guides). 10Some of the Guidelines are germane to the resolution of this matter. Clause 1.21, under the heading "Permanent impairment", provides: "1.21 Before an impairment evaluation is undertaken, it must be shown that the impairment has been present for a period of time, is static, well stabilised and unlikely to change substantially regardless of treatment. The AMA 4 Guides (page 315) state that permanent impairment is impairment that has become static or well stabilised with or without medical treatment and is not likely to remit despite medical treatment. A permanent impairment is considered to be unlikely to change substantially (ie by more than 3% whole person impairment) in the next year with or without medical treatment. If an impairment is not permanent, it is inappropriate to characterise it as such and evaluate it according to the Guidelines." 11Clause 1.3 provides that where the text used in the Guidelines is in bold, it is a directive as to how the assessment should be performed. Bold text is to be found in clause 1.23, also under the heading "Permanent impairment", which provides: " 1.23 The evaluation should only consider the impairment as it is at the time of the assessment. " 12Clause 1.33, under the heading "Pre-existing impairment", provides: "1.33 The evaluation of the permanent impairment may be complicated by the presence of an impairment in the same region that existed prior to the relevant motor accident. If there is objective evidence of a pre-existing symptomatic permanent impairment in the same region at the time of the accident, then its value should be calculated and subtracted from the current whole person impairment value. If there is no objective evidence of pre-existing symptomatic permanent impairment, then its possible presence should be ignored." 13Clause 1.36, under the heading "Subsequent injuries", provides: "1.36 The evaluation of permanent impairment may be complicated by the presence of an impairment in the same region that has occurred subsequent to the relevant motor accident. If there is objective evidence of a subsequent and unrelated injury or condition resulting in permanent impairment in the same region its value should be calculated. The permanent impairment resulting from the relevant motor accident should also be calculated. If there is no objective evidence of the subsequent impairment its possible presence should be ignored." 14The panel referred to clauses 1.33 and 1.36 in its reasons in the context of determining whether Mr Cha's impairment could be apportioned between the first and second accidents. The effect of its decision is that the depressive condition caused by the first accident had not stabilised at the time of the second accident and, accordingly, could not at that time be classified as a permanent impairment within the meaning of clause 1.21 of the Guidelines. It was apparently on this basis that the panel certified that the first accident had not given rise to a whole person impairment greater than 10%. For the same reason, the condition was not a "pre-existing symptomatic permanent impairment" for the purpose of clause 1.33, so that its "possible presence" was to be ignored in evaluating the permanent impairment occasioned by the second accident. 15It is here, says Allianz, that the panel fell into error. Counsel for Allianz, Mr Rewell SC, emphasised the directive provision in clause 1.23 of the Guidelines that the evaluation of permanent impairment should be considered only as at the time of the assessment: that is, for present purposes, at the time of the panel's review. So it must be, Mr Rewell said. As he put it in written submissions, to assess impairment at any previous time "must be either hypothetical or reconstructive". 16The focus of the argument was the second sentence of clause 1.33: "If there is objective evidence of a pre-existing symptomatic permanent impairment in the same region at the time of the accident, then its value should be calculated and subtracted from the current whole person impairment value". For that clause to be engaged in the assessment of permanent impairment resulting from the second accident, Mr Rewell argued, it was not necessary that the impairment arising from the first accident be permanent at the time of the second accident. All that was required was that there be objective evidence of such an impairment at that time. Whether the impairment occasioned by the first accident was permanent was a matter to be assessed as at the time of the review, as mandated by clause 1.23. The panel found that it was. As I have said, it certified that the condition occasioned by the first accident had stabilised at the time of the review. Accordingly, said Mr Rewell, the panel should have evaluated that impairment and taken it into account when evaluating the impairment arising from the second accident, in the manner required by clause 1.33. 17The source of the error, Mr Rewell argued, was that the panel lost sight of the fact that its task was to assess the whole person impairment arising from two accidents. If Mr Cha had claimed only in respect of the first accident, a medical assessor or review panel would have been required to treat the injuries arising from the second accident as "subsequent injuries" within the meaning of clause 1.36. By virtue of that clause, it would have been necessary to determine whether those injuries gave rise to permanent impairment and, if so, to evaluate that impairment. As Mr Rewell put it, an overall assessment of permanent impairment could not have been made if clause 1.36 were correctly applied. Two separate assessments of impairment would have been required. 18As it was, Mr Rewell said, the panel had before it two claims, each of which had to be dealt with. By clause 1.23, its duty was to assess the permanent impairment occasioned by each accident as at the time of the review. Mr Rewell argued that it was "comfortably in a position" to do so. The evaluation of the impairment arising from the first accident would have to have taken account of that occasioned by the second accident, in accordance with clause 1.36. More importantly from the perspective of Allianz, the evaluation of the impairment arising from the second accident would have to have taken account of that occasioned by the first, in accordance with clause 1.33. 19Mr Rewell explained the process, based on the AMA 4 Guides, by which whole person impairment is assessed. For psychiatric injury, regard is had to its effect upon aspects of a person's functioning, such as personal hygiene, social functioning and concentration, and that effect is given a numerical score. Those scores are then translated into a measure of permanent impairment expressed as a percentage. That process was undertaken in the present case, and the panel's findings are set out in its reasons. In practical terms, Mr Rewell said, the panel should have apportioned the outcome between the two accidents by assessing what contribution each of them had made to those findings. 20In response, counsel for Mr Cha, Mr Romaniuk, and for NRMA, Mr Fitzsimmons, argued that the meaning of the opening words of the second sentence in clause 1.33 is plain. The reference to objective evidence of a pre-existing symptomatic permanent impairment at the time of an accident means evidence of an impairment which was permanent at that time. If the pre-existing impairment was not permanent at the time of the accident, the last sentence of clause 1.33 requires that its possible presence be ignored. Accordingly, they submitted, the panel's approach was correct. 21Mr Romaniuk referred to the clauses of the Guidelines dealing with causation, clauses 1.7 - 1.9. There is no need to set them out. It is sufficient to say that they treat causation as a matter of judgment in the instant case, broadly in accordance with common law principles. By contrast, he said, the question of apportionment between an injury caused by an accident and a pre-accident or post-accident injury is dealt with by clauses 1.33 - 1.36, the terms of which are rigid. As he put it in argument, clause 1.33 provides for a "statutorily artificial process" to achieve a "degree of mathematical outcome" in cases of this kind. Neither clause 1.33 nor clause 1.36 allows for the degree of "discretionary latitude" which attends a decision on causation. 22Thus, Mr Romaniuk argued, clause 1.33 must be applied according to its terms, and is engaged only if the pre-accident injury was permanent at the time of the accident. Clause 1.23 does no more than require that the decision whether such an injury was permanent at that time be based upon all the relevant material before an assessor or a review panel at the time of assessment. 23In response to Mr Rewell's argument that an evaluation of the impairment caused by the first accident would have required consideration of the impairment caused by the second, pursuant to clause 1.36, Mr Romaniuk pointed out that that clause is concerned with evidence of a subsequent and unrelated injury or condition. In the present case, he argued, the condition caused by the second accident was not unrelated because the panel found it to be an exacerbation of the condition arising from the first. However, I think that there is force in Mr Rewell's response that this is not a correct interpretation of the word "unrelated". As an example of a "related" condition, Mr Rewell referred to the common situation where impairment from an accident is increased by subsequent related events, such as medical treatment or surgery. In the present case Mr Cha's condition was exacerbated by a wholly unrelated event, a second accident, so that that exacerbation was relevantly unrelated. 24That said, whether clause 1.36 would by its terms have been applicable to the evaluation of permanent impairment caused by the first accident is not a matter which I need to decide. Allianz being the insurer in respect of the second accident, the principal focus of its argument was, of course, upon clause 1.33. 25Mr Fitzsimmons challenged Mr Rewell's contention that clause 1.23 recognises the reality that the assessment of permanent impairment at some earlier time could be no more than hypothetical or re-constructive. He also referred me to the AMA 4 process of assessing impairment by reference to the effect of a condition upon a person's functioning. By that process, he said, the measure of Mr Cha's impairment from the first accident at the time of the second accident could have been assessed. The panel had before it all the material necessary to determine his functioning at that time and to assign scores to relevant aspects of it. It had the medical material, including the report of the psychiatrist who was treating him at the time, which disclosed his history and the clinical assessment of him. 26In fact, said Mr Fitzsimmons, the panel took account of the material concerning Mr Cha's condition at the time of the second accident, noting that he had been reporting some improvement and that he had just commenced a new course of treatment. In those circumstances, the panel could not have foreseen what might have happened but for the intervention of the second accident. Accordingly, the finding that his condition had not stabilised at that time was clearly open. 27Mr Fitzsimmons argued that there was no inconsistency between the requirement, pursuant to clause 1.23, to evaluate Mr Cha's impairment as at the time of the review and the requirement, under clause 1.33, to determine whether the condition arising from the first accident was permanent at the time of the second. The panel evaluated his impairment as at the time of the review and then determined, pursuant to clause 1.33, whether there needed to be an adjustment of that evaluation because of a pre-existing permanent impairment at the time of the second accident. That was itself part of the evaluation process. It having been determined that there was no such permanent impairment, the evaluation of his impairment at the time of the review remained undisturbed. This, said Mr Fitzsimmons, was the very process which clause 1.23 mandated. 28One can appreciate the force of these arguments, but I am persuaded that Mr Rewell's interpretation of clause 1.33 is correct. The clause falls to be considered if at the time of the accident in question there is objective evidence of a pre-existing impairment, but the permanency or otherwise of that impairment is to be determined as at the time of the assessment. The present case demonstrates why that must be so. 29The pre-existing condition relevant to the assessment of impairment from the second accident was itself engendered by a motor accident which was also the subject of a claim under the Act. As noted, the panel was considering two claims, involving different insurers, concurrently. In the event, the panel made no evaluation of the permanent impairment arising from the first accident, even as at the time of the review. The only basis for this appears to be its finding that the impairment caused by the first accident had not stabilised at the time of the second. As I have said, it seems that it was on this basis that it certified that the first accident had not given rise to a whole person impairment greater than 10%. 30Yet, as Mr Rewell rightly emphasised, the panel found that the condition arising from the first accident had stabilised at the time of the review, and certified accordingly. In other words, as at the time of the review the condition was permanent within the meaning of clause 1.21. That being so, the panel could, and should, have assessed the whole person impairment attributable to that accident. It was required to do so not only for the purpose of applying clause 1.33 to its assessment of the impairment caused by the second accident, but also because there was before it a claim in respect of the first. As Mr Rewell pointed out, nothing in the panel's reasons suggests that the state of the evidence was such that that assessment could not have been made. 31Clearly, the first accident contributed to Mr Cha's impairment as it was assessed at the time of the review. The panel found that that accident had caused his depressive condition and that the second accident had exacerbated it. If the panel had assessed the permanent impairment caused by the first accident, it would have been in a position to apportion the whole person impairment it found between the two accidents. Clause 1.33 (and, if applicable, clause 1.36) required it to do so. 32If the interpretation of clause 1.33 urged by the defendants were correct, the panel would assess the permanent impairment arising from the first accident but be bound to disregard it when determining the impairment arising from the second. Such a result would be absurd, and it lends force to Mr Rewell's position concerning what he described as the dominant clause, clause 1.23. That clause requires the evaluation of impairment as at the time of assessment, whether that impairment arises directly from the accident in question or is a pre-existing or subsequent impairment within the meaning of clauses 1.33 and 1.36. 33Insofar as Allianz challenged the manner in which the panel dealt with the claim from the first accident, Mr Fitzsimmons questioned whether it had standing to do so, given that it was not a party to that claim. Plainly enough, however, it is the failure of the panel to assess the permanent impairment arising from that accident which is the foundation of Allianz's argument that the necessary apportionment was not carried out. That failure bore directly upon the question whether the assessment of the impairment arising from the second accident was affected by error. 34I am satisfied that error of law is established and the panel's determination must be set aside. It was not in contest that the error contended for would be error of law in the application to the assessment of the relevant Guidelines, which have the force of delegated legislation, and that the error, if established, would entitle Allianz to relief. Accordingly, I make the declaration and orders claimed in paras 1 - 3 of the summons initiating the proceedings. 35I declare that the Statement of Reasons and Certificates of Determination, dated 30 July 2009, issued by a Review Panel appointed by the first defendant under s 63 of the Motor Accidents Compensation Act 1999, are invalid. I order that that Statement of Reasons and those Certificates of Determination be quashed, and that the matter be remitted to the first defendant to be determined in conformity with the reasons of this Court. If necessary, I shall hear the parties on costs.