Industrial Galvanisers Corporation Pty. Ltd. v. Parmar [2002] NSWCA 255

IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA40004/02 CC57679/99

SHELLER JA HODGSON JA

Wednesday 7 August 2002 INDUSTRIAL GALVANISERS CORPORATION PTY. LTD. V. PARMAR Judgment 1 SHELLER JA: I agree with the reasons on Hodgson JA set out below. 2 HODGSON JA: On 14 December 2001, Walker J in the Compensation Court made awards in favour of the respondent Amarjit Singh Parmar, being awards for weekly compensation and also lump sum compensation pursuant to ss.66 and 67 of the Workers Compensation Act 1987. The appellant Industrial Galvanisers Corporation Pty. Limited appeals to this Court from those awards.

CIRCUMSTANCES 3 On 30 August 1989, the respondent sustained injury to his back in the course of his employment with the appellant. 4 The Amended Application for Determination filed on 18 July 2001 contained the following particulars of the respondent's application. It stated the nature of his injury to be "injury to back". As regards particulars of compensation claimed, it alleged the following in respect of compensation under s.66: 50% permanent impairment of the back $30,000.00. 40% permanent impairment of the neck $16,000.00. 20% permanent impairment of the left leg at or above the knee $15,000.00 10% permanent impairment of the right leg at or above the knee $7,500.00 20% permanent impairment of the sexual organs $9,600.00

It gave the following particulars of compensation claimed under s.67: 70% of the most extreme case $35,000.00 5 The application was heard on 3 December 2001. 6 Medical evidence called for the applicant included reports from Dr. Gill, a treating GP, who diagnosed disc prolapses, chronic pain syndrome, severe depression, and sexual dysfunction; Dr. Chaudhary, a psychiatrist, who diagnosed severe depression caused by the work injury; Dr. Guirgis, a treating orthopaedic surgeon, who diagnosed disc injuries and pain/anxiety/depression syndrome; Dr. Gronow, a pain management specialist, who diagnosed mild pre-existing degenerative disease which had become symptomatic as a result of the work injury, and a high level of emotional distress, anxiety and depression; Dr. Watson, a neurologist, who supported disc injuries and deep depression attributable to the injury; Dr. Dean, a urological surgeon, who diagnosed loss of libido due to depression but also assessed loss of sexual function at 20% due to the back disorder; Dr. Bannan, a psychiatrist, who diagnosed depression secondary to the injury and pain; Dr. Tan, a GP, who noted mild tenderness in the back; and Dr. Lucas, a radiologist, who found some spinal abnormalities. 7 Medical evidence for the respondent comprised reports from Dr. Matheson, a neurosurgeon, who said there was nothing wrong with the respondent; Dr. Lyons, a orthopaedic surgeon, who found no impairments or losses; four radiologists who found little or no abnormalities; Dr. Dyball, a psychiatrist, who accepted the view of Drs. Matheson and Lyons that the respondent had no organic disability, and expressed the view that his presentation was not consistent with profound major depression. 8 None of the doctors gave oral evidence or were cross-examined. 9 At the outset of the case, the primary judge asked counsel for the respondent whether there were any amendments (presumably, amendments to the application) to which counsel responded no. 10 During submissions, counsel for the appellant submitted that "he only relies on orthopaedic injuries and not functional", following which the primary judge noted that, in the application, "there is no psychological injury … pleaded here". Counsel for the appellant then said that his submission was "if there was any problem then it is a problem that would rest in the psychological rather than the physical and again, in my submission, the result of that would be [an award for] the respondent". In relation to loss of use of sexual organs, counsel for the appellant submitted that "it is more likely psychological rather than physical and again that is not a case we have been asked to do today". 11 At the end of the submissions of the appellant's counsel, there was this exchange with the primary judge: HIS HONOUR Why did your client get Dr Dyball to examine this man if it is not a psychiatric case?

MR PEARCE Your Honour, I suppose it is part of the double whammy, your Honour. What we were trying to do was show that there was -

HIS HONOUR How can you put psychiatric evidence in and not say it is an element in the case? That is why I am asking.

MR PEARCE Your Honour, I mean, it is relevant. For my friend's case is relevant to pain and suffering is relevant to our case in relation to that and it is also relevant in that the way that our medical case is we are saying there is no objective and there is -

MR PEARCE No, your Honour. We are saying it is a case that involves malingering, basically, contrivance.

HIS HONOUR That is not what Dr Dyball says. Just says he cannot explain what is wrong.

MR PEARCE Your Honour, he says he has no ongoing illness or disability. Sorry, he is quoting Dr Matheson and Dr Lyons.

HIS HONOUR All right. I understand your submission. Yes, Mr Martin? 12 In his submissions to the primary judge, counsel for the respondent referred to Dr. Watson's evidence, and submitted "although he does talk of a functional overlay, the doctor, as you will see in his later reports, has no doubts about the fact that it is now permanent and now stable, and is satisfied from the objective evidence that the man does have the problem in fact he indicated today, the three areas on his spine". Later on, the primary judge remarked "This is one of these all or nothing cases, is it not?" 13 Towards the end of the submissions for the respondent, there was the following exchange: MR MARTIN Your Honour, Dr Watson puts the back at 50 per cent and the left leg at 20 per cent and Dr Dean, places the loss of sexual function at 20 per cent.

HIS HONOUR What do you say about Mr Pearce's view that this is all hypothetical?

MR MARTIN Quite often it is in these sort of cases but in my submission the applicant has set out the difficulties that he has. However, Dr Dean does base his opinion on the reports that your Honour has. That is Dr Guirgis and Dr Watson and the impairments and losses that Dr Watson talks of and it is on that basis, in my submission, that Dr Dean's assessment is well founded.

MR MARTIN That is the basis of his assessment which fits of course within MORROW and thereafter clearly there is considerable pain and suffering. Having regard to the evidence of Dr Chaudhary and Dr Bannan and also the history of what is directly related to the pain, the overdoses that led to hospitalisation and the medication that your Honour is aware that the applicant is taking at the present time.

THE PRIMARY JUDGE'S DECISION 14 The primary judge found the respondent to be a credit-worthy witness. He also found that the respondent suffered a back injury in the course of his employment and there is no appeal from that finding. 15 The primary judge found that, arising out of and in the course of his employment, the respondent sustained a secondary psychological injury, namely chronic severe depression, including physiological symptomatology involving widespread pain, sleep disturbance, and psycho-motor retardation. He found that this psychological injury was likely to continue into the indefinite future and was therefore permanent for the purpose of s.66. He took it into account both in finding causation of claimed impairments and losses, and also as an independent element in assessing s.67 compensation. 16 Next, the primary judge found that the respondent had sustained permanent impairment of the back and neck (relying in part on the psychological injury), a permanent loss of efficient use of both legs above the knee secondary to pain referred from the permanent back impairment, and a permanent loss of the efficient use of organs of sex caused by pain from the permanent back impairment and loss of libido caused by the secondary psychological injury. 17 The primary judge then, of his own motion, amended the particulars in the application to include a claim for 100% permanent loss of the efficient use of the organs of sex, relying on the circumstance that evidence to that effect had been admitted without objection, and that there was no lack of procedural fairness to the appellant in the course. 18 The primary judge made the following awards: 1. That the respondent pay the applicant, on the basis of total incapacity, weekly compensation at the rate of - (1) $579.80 from 4th November 1999 to 27th April 2000. (2) $281.60 from 28th April 2000 to 30th September 2000. (3) $284.60 from 1st October 2000 to 31st March 2001. (4) $291.10 from 1st April 2001 to 30th September 2001. (5) $296.20 as adjusted from 1st October 2001, such weekly payment to continue in accordance with the provisions of the Act.

2. That the respondent pay the applicant interest on arrears of the abovementioned weekly compensation at the rate of 3% p.a.

3.(1) That the respondent pay the applicant, as lump sum compensation under section 66, $15,200 in respect of 38% permanent impairment of the applicant's neck (being in respect of 40% permanent impairment of the applicant's neck less a deductible proportion of 5% thereof pursuant to section 68A). (2) That the respondent pay the applicant, as lump sum compensation under section 66, $28,500 in respect of 47.5% permanent impairment of the applicant's back (being in respect of 50% permanent impairment of the applicant's back less a deductible proportion of 5% thereof pursuant to section 68A). (3) That the respondent pay the applicant, as lump sum compensation under section 66., $7,125 in respect of 9.5% loss of use of the applicant's left leg at or above the knee (being in respect of 10% loss of use of the applicant's left leg at or above the knee less a deductible proportion of 5% thereof pursuant to section 68A). (4) That the respondent pay the applicant, as lump sum compensation under section 66, $14,250 in respect of 19% loss of use of the applicant's right leg at or above the knee (being in respect of 20% loss of use of the applicant's right leg at or above the knee less a deductible proportion of 5% thereof pursuant to section 68A). (5) That the respondent pay the applicant, as lump sum compensation under section 66, $40,185 in respect of 85.5% loss of use of the applicant's sexual organs (being in respect of 90% loss of use of the applicant's sexual organs less a deductible proportion of 5% thereof pursuant to section 68A).

4. That the respondent pay the applicant, as lump sum compensation under section 67, $37,500 in respect of pain and suffering.

5. That the respondent pay the applicant's section 60 expenses.

6. That the respondent pay the applicant's costs forthwith after they have been agreed or assessed.

GROUNDS OF APPEAL 19 In its Amended Notice of Appeal, filed pursuant to leave granted on 31 January 2002, the appellant relied on the following grounds: 1 That His Honour erred in assessing Section 66 Losses to include losses flowing from psychological conditions when none were alleged in the Application for Determination.

2 That His Honour denied the Appellant natural justice in assessing Section 66 Losses to include losses flowing from psychological conditions when none were alleged in the Application for Determination.

3 That His Honour erred in considering loss of libido in making his assessment of the Respondent's entitlement pursuant to Section 66 for loss of sexual function.

4 That His Honour denied the Appellant natural justice in amending the Respondent's claim to be 100% permanent loss of sexual function without giving the respondent notice of his intention to make such an amendment.

5 That His Honour erred in amending the Application for Determination to include a claim for 100% permanent loss of sexual function without such an Application for Amendment being made by the Respondent.

6 That His Honour erred in taking into account in his assessment of the Respondent's entitlement pursuant to Section 67 somatised (sic) pain resulting from depression when psychological conditions were not alleged in the Application for Determination.

7 That His Honour denied the Appellant natural justice in taking into account somatized pain without giving notice of his intention to do so to the Respondent.

8 His Honour erred in taking into account psychological, psychiatric and functional matters when assessing the Applicant's incapacity. 20 The Notice of Appeal then sought that the award be set aside and that there be a new trial. However, as there was no challenge to the finding of a back injury caused to the respondent in the course of his employment, it is plain that the new trial could only relate to the amount of compensation. The matter accordingly fell within s.46A of the Supreme Court Act, and was heard by two judges of appeal.

STATUTORY PROVISIONS 21 The respondent's application invoked the provisions of ss.66 and 67 of the Workers Compensation Act 1987, as they were prior to the 2001 amendment, which commenced on 1 January 2002. Those provisions were as follows: 66(1) A worker who has suffered the loss of a thing mention in the Table to this Division as the result of an injury is entitled to receive from the worker's employer by way of compensation for the loss, in addition to any other compensation under this Act, the amount equal to the percentage of $100,000 set out opposite to that loss in that Table. (2) A worker who has suffered more than one of the losses mentioned in the Table to this Division as a result of the same injury is not entitled to receive as compensation under this section, more than $121,000 in respect of those losses. (3) If an amount mentioned in this section at any time after the commencement of this Act: (a) is adjusted by operation of Division 6; or (b) is adjusted by an amendment of this section, the Compensation payable under this section is to be calculated by reference to the requisite percentage of the amount in force at the date of the injury. 67(1) A worker who has suffered a loss mentioned in the Table to this Division (or 2 or more of any such losses as the result of the same injury) is entitled to receive-from the worker's employer by way of compensation for pain and suffering resulting from the loss or all those losses, in addition to any other compensation under this Act, an amount not exceeding $50,000. (1A) Because there is a distinction between "injury" and "loss resulting from an injury" (and compensation is payable under this section only for pain and suffering resulting from a loss), the pain and suffering for which compensation is payable under this section does not include pain and suffering that results from the injury but not from the loss. (2) This section does not apply if the compensation paid or payable under s.66 for the loss or all those losses is less than 10 per cent of the maximum amount referred to from time to time in s.66(1). (3) The maximum amount of compensation under this section is payable only in the most extreme case and the amount payable in any other case shall be reasonably proportionate to that maximum amount, having regard to the degree and duration of pain and suffering and the severity of the loss or losses. (4) The amount of compensation payable under this section in any particular case shall, in default of agreement, be determined by the Compensation Court. (4A) It is permissible for an agreement as to the amount of compensation to be paid to the worker under this section to provide that the amount to be paid is the proportion of the maximum amount payable under this section that is that is the same as the proportion of the maximum amount payable under s.66 that is represented by the amount payable to the worker under that section in respect of the loss or losses concerned. This section does not prevent an agreement that some other amount is to be the amount to be paid to a worker under this section. (5) Compensation under this section is not payable after the death of the worker concerned. (6) If an amount mentioned in this section at any time after the commencement of this Act: (a) is adjusted by the operation of Division 6; or (b) is adjusted by an amendment to this section, the compensation payable under this section is to be calculated by reference to the amount in force at the date of injury. (7) In this section: pain and suffering means - (a) actual pain; or (b) distress or anxiety, suffered or likely to be suffered by the injured worker, whether resulting from the loss concerned or from any necessary treatment.

SUBMISSIONS 22 The respondent conceded the correctness of grounds 4 and 5 in the Amended Notice of Appeal, and submitted that the result, in the absence of agreement, should be that the matter be remitted to the Compensation Court for orders reflecting the assessment of 20% loss of use of the sexual organs and any consequential adjustment of the s.67 award. The remaining issues were argued under two headings, first, that there had been a denial of natural justice in deciding the case on the basis of psychological or psychiatric injury, when this had not been claimed; and second, there was no evidence justifying a finding that any psychological or psychiatric injury was permanent. 23 Mr. Hislop QC for the appellant pointed to Compensation Court rules 9.1 and 9.2 as requiring an application for compensation to contain "such particulars as are necessary to enable the opposing party to identify the case he is required … to meet". Mr. Hislop submitted that the application made no reference to any psychological injury or functional overlay, as it should have done if the respondent was to succeed on the case as found by the primary judge. He noted that no amendment was sought to the application, and he submitted that the appellant conducted its defence accordingly. No objection was taken to the medical evidence, as it was tendered, precisely because the case was purely one of physical injury and physical problems. Had it been a psychological or psychiatric case, many issues would have required exploration. There would have been cross-examination of the respondent on psychological matters, and there was no such cross-examination in this case. The psychological and psychiatric evidence from the experts would have been the subject of detailed exploration. 24 Mr. Hislop submitted that in the passages quoted, the primary judge never indicated that he was proposing to deal with the case as including a psychological issue, and the counsel for the respondent never submitted that the primary judge should do so. Yet, in his decision, the primary judge took a psychological component into account in every aspect of the case. This made the trial unfair to the appellant. 25 Next, Mr. Hislop submitted that evidence referred to by the primary judge to the effect that the prognosis of the respondent in relation to his depression was "poor" could not justify a finding that the condition was permanent; and in any event, certainly could not justify a finding that the impact of any psychological condition upon the impairment or loss of use of various parts of the body was permanent. The term "permanent" as used in the Act was used in its ordinary sense: see Ansett Australia Limited v. Dale (2001) 22 NSWCCR 527 at [39]; and requires in effect a finding on the balance of probabilities that the condition will never improve. 26 Mr. Watson for the respondent referred to State Rail Authority (NSW) v. Reodica (2001) 21 NSWCCR 308 for the proposition that the Compensation Court is not a court of strict pleading, and is required by s.17(1) of the Compensation Court Act 1984 to decided any matter "upon the real merits and justice of the case". 27 In that case, the worker in his application claimed that he suffered post-traumatic stress disorder (PTSD) as a result of a physical and verbal assault on a specified day, and also as a consequence of the nature and conditions of his employment. The matter was heard by a Commissioner, who was not satisfied that the alleged physical assault took place and found in any event that PTSD was not established; and he made an award for the employer. The worker appealed to a judge, who found that there was evidence suggestive that the nature and conditions of employment may have caused psychological injury in the form of anxiety, depression, or adjustment disorder; and concluded that the Commissioner had erred when he confined himself to considering PTSD; and he ordered a new hearing. The Court of Appeal dismissed the employer's appeal from that decision. 28 Mr. Watson submitted that the application in this case correctly alleged physical injury at work, and correctly alleged impairments and loss in relation to various parts of the body. The medical evidence served by the appellant disclosed psychological injury as part of the causation of the various impairments and losses. Those medical reports were tendered without objection at the beginning of the case: if the appellant had wished to take the point that no reliance could be placed on psychological causes, that matter should have been raised by the appellant at that point, so the matter could have been crystallised at the outset of the hearing. Although the submission was made by the appellant that the respondent could not rely on a psychological case, the primary judge plainly indicated that he had it in mind to take that course, relying in part on the circumstance that the appellant tendered its own psychiatric evidence. Had the appellant wished to do more than take a technical point that the psychological case was not open on the application, the appellant's counsel should then have submitted that the case would have been conducted differently had the appellant understood that any sort of psychological case was being mounted, and should have submitted that it would have been unfair to decide the case on that basis, and/or should have sought an adjournment to deal with the matter. 29 On the other question, Mr. Watson submitted that the evidence of poor prognosis was material on which the primary judge could properly conclude that the psychological condition was permanent; and in any event, the medical experts, in particular Dr. Watson, who gave evidence of percentages of impairment and loss, partly in reliance on psychological factors, gave evidence that the relevant impairment and loss was permanent. 30 In reply, Mr. Hislop submitted that the requirement for decision of any matter upon the real merits and justice of the case included a requirement that natural justice be afforded. Furthermore, when the appellant's counsel took the point that it was not open to the respondent to rely on a psychological case, counsel for the respondent should have made it plain, if it were the case, that the respondent was relying on a psychological case, yet he did not do so. The primary judge gave no indication of any decision that he would do so, and indeed gave no reasons for his decision to do so in his reasons for judgment.

DECISION 31 I accept Mr. Hislop's submission that it was squarely submitted to the primary judge that the respondent could not rely on a psychological case, and I accept that the circumstance that there was no cross-examination of the respondent as to psychological matters supports the view that the appellant conducted its defence of the case on that basis. I accept also that it was never stated by the primary judge that the respondent could rely on a psychological case, and that it was never squarely submitted by the respondent that he could do so and was doing so. 32 However, the application clearly referred to percentages of impairment and loss of various parts of the body in addition to the back which was injured at work. The medical evidence served and tendered by the respondent supported the case of causation of that impairment and loss partly by reference to psychological factors. Further, not only was that evidence not objected to, but also the appellant led its own psychiatric evidence. 33 In all those circumstances, if the appellant did not before the primary judge contest psychological matters because it believed they were not in issue, even in relation to causation of the alleged impairments and losses, I am not satisfied that that was a reasonable course. In fact, I think it was within the scope of the application for the respondent to rely on psychological mechanisms of causation of the relevant impairments and losses, and on his psychological condition as contributing to his pain and suffering from those impairments and losses. It would have been preferable for the matter to have been made explicit at the outset of the hearing, and certainly before the end of the hearing; but I do not see that either party was more at fault in this matter than the other. I do not think the appellant was denied natural justice or procedural fairness, in so far as the primary judge relied on psychological matters as part of the mechanism of causation of the claimed percentages of impairment and losses, and on the respondent's psychological condition as contributing to his pain and suffering from these impairments and losses. Indeed, I think in all the circumstances, it would be unfair to the respondent to grant a new trial on that basis. 34 However, it does appear that in assessing s.67 compensation, the primary judge took into account the respondent's psychological condition, independently of its causal role in bringing about the claimed impairments and losses, and independently of its role in contributing to pain and suffering associated with those impairments and losses. The primary judge took into account the psychological condition as an element in its own right of the respondent's pain and suffering. In my opinion, that was not open on the application and on the way the case was conducted, and there was a denial of natural justice to that extent. 35 This view, coupled with the respondent's concession concerning the amendment permitting a claim in excess of 20% loss in respect of the sexual organs, requires a re-assessment both of the s.66 award in relation to impairment of the sexual organs, and the s.67 award generally. It seems clear that in relation to the s.66 award in respect of the sexual organs, it will be simply a matter of substituting 20% for the primary judge's figure of 85.5%. 36 Turning to Mr. Hislop's second area of submissions, there was in my opinion evidence on which the primary judge could find that the respondent's impairment and losses were permanent, partly on the basis that the depression was permanent. Such a finding had some support by the evidence of a poor prognosis for the respondent's depression, and also by evidence directly supporting permanent impairments and losses of percentages similar to those accepted by the primary judge. 37 In my opinion, the errors which I have found did not impact on the assessment of weekly compensation.

CONCLUSION 38 For these reasons, I propose the following orders: 1. Appeal allowed in part. 2. Awards in relation to loss of use of respondent's sexual organs and s.67 compensation set aside, and matter remitted to the Compensation Court so that these be re-assessed on the basis of the evidence before Walker J, the findings of Walker J, and these reasons. 3. Appellant to pay one-half the respondent's costs, and the respondent to have a suitors' fund certificate in respect of his costs if otherwise entitled.

39 The costs order is on the basis that the appeal has substantially failed, and has succeeded partly in respect of a matter wholly conceded by the respondent.

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