Marks v Secretary, Department of Communities and Justice

Factual background

1. In (or about) 2018 the plaintiff claimed, under s 66 of the Workers Compensation Act 1987 (NSW) ("WC Act"), damages for permanent impairment arising out of a workplace injury he suffered whilst employed by the first defendant. The injury was psychiatric. The first defendant accepted liability. The Workplace Injury Management and Workers Compensation Act 1998 (NSW) ("WIM Act") makes detailed provision for the procedures by which compensation (and damages) for which the WC Act provides are to be assessed. The plaintiff was not entitled to damages under s 66 of the WC Act unless the degree of his permanent impairment was assessed to be 10% or greater. He was, accordingly, referred for medical assessment under the provisions of the WIM Act.
2. On 24 October 2019 an approved medical specialist ("AMS") assessed the degree of permanent impairment caused by the workplace injury at 21%, made up of a then current impairment of 19% and an increment of 2% representing the benefits of treatment the plaintiff had received (at [22] of the preliminary reasons). The AMS issued a medical assessment certificate ("MAC") to that effect. On reconsideration of that assessment on 14 April 2020 (as explained at [23]-[27] of the preliminary reasons) the AMS confirmed that assessment and issued a further MAC to that effect. Although he was aware that the plaintiff had previously suffered post traumatic stress disorder ("PTSD"), the AMS expressly found that there was "no evidence to suggest the experience of psychiatric disturbance or receipt of psychiatric treatment in the years preceding" the workplace injury in respect of which the assessment was conducted. The AMS thus treated the plaintiff as having been asymptomatic prior to the events that gave rise to the psychiatric injury.
3. Pursuant to s 327 of the WIM Act the plaintiff's employer, the first defendant, appealed to an Appeal Panel. The Appeal Panel revoked the MAC of 14 April 2020 and certified, by way of substitution, that the plaintiff's degree of permanent impairment caused by the workplace injury was 14%. It did this, as I understand its reasons, because, while agreeing with the AMS that the plaintiff's then current impairment was 19%, it considered that part of that impairment was due to a pre-existing, though at the time of injury asymptomatic, condition from which the plaintiff suffered (that being the effects of the previous PTSD, or vulnerability of the plaintiff to subsequent psychiatric injury by reason of that condition). The Appeal Panel also revoked the increment of 2% allowed by the AMS for "the treatment effect".
4. In what appears to be a quest for consistency, s 376 of the WIM Act provides for the issue of guidelines ("Workers Compensation Guidelines" - "the Guidelines") for the assessment of the degree of permanent impairment of an injured worker. Section 322(1) mandates that the assessment of the degree of permanent impairment "is to be made" in accordance with those Guidelines.
5. Section 323(1) requires that, in the assessment of the degree of permanent impairment, there is to be a deduction for any proportion of the impairment so assessed that is due to "any previous injury … or … any pre-existing condition or abnormality". Subsection (4) provides that the Guidelines: "… may make provision for or with respect to the determination of the deduction required by this section."
6. Although, with respect to physical injury, the Guidelines made under s 376 have adopted Guidelines issued by the American Medical Association (commonly referred to as "AMA5"), in respect of psychiatric injury a separate chapter of the Guidelines (Ch 11) has been issued. Guideline 11.10 provides: "To measure the impairment caused by a work-related injury or incident, the psychiatrist must measure the proportion of WPI [whole person impairment] due to a pre-existing condition. Pre-existing impairment is calculated using the same method for calculating current impairment levels. The assessing psychiatrist uses all available information to rate the injured worker's pre-injury level of functioning in each of the areas of function. The percentage impairment is calculated using the aggregate score and median class score using the conversion table [set out] below. The injured worker's current level of WPI % is then assessed, and the pre-existing WPI % is subtracted from their current level, to obtain the percentage of permanent impairment directly attributable to the work-related injury. …" (emphasis added)
7. The Appeal Panel expressly found that, if it were to apply that clause, the assessment of the plaintiff's permanent impairment "due to any pre-existing condition or abnormality" would be nil (Statement of Reasons at [87]). That was because the plaintiff, at the time of his injury, showed no signs of psychiatric injury and his pre-injury level of functioning was normal (as found by the AMS). Nevertheless, the Appeal Panel held, so to apply Guideline 11.10 would produce an anomalous result. That, in turn, was because the Appeal Panel considered that the pre-existing PTSD, and a pre-existing intermittent depressive condition, (although at the time of the relevant injury asymptomatic) rendered the plaintiff more vulnerable to psychiatric injury and therefore contributed to his permanent impairment (see, for example, [113]-[123] of the Appeal Panel's Statement of Reasons, extracted in the preliminary reasons at [37]). The Appeal Panel considered that what was prescribed by Guideline 11.10 was contrary to a line of authority stating "principles" with respect to s 323(1) (see [35]-[37] of the preliminary reasons). It seems reasonably clear that the Appeal Panel considered that Guideline 11.10 was inconsistent with s 323(1) as interpreted in previous decisions of this Court. That was because Guideline 11.10 focused on "pre-injury level of functioning" and not on any contribution made to the current level of functioning by a pre-existing condition or abnormality (whether or not symptomatic). As referred to in the preliminary reasons (at [44]-[46]), a number of decisions of this Court support the proposition that, with respect to physical injury, a pre-existing condition or abnormality does not have to be symptomatic in order to make a contribution to the assessed level of permanent impairment.
8. The plaintiff's principal contention, in the present proceeding, was that, by reason of the mandatory language of s 322(1) of the WIM Act, the Appeal Panel was obliged to apply Guideline 11.10. Since (as the Appeal Panel accepted) application of Guideline 11.10 would result in no deduction representing any proportion of the plaintiff's permanent impairment that was due to his pre-existing vulnerability, the Appeal Panel was in error in revoking the 14 April 2020 MAC and substituting a different certificate with a reduced assessment of the degree of permanent impairment.
9. As indicated in the preliminary reasons ([54]-[55]), the parties took starkly different positions in relation to the applicability of Guideline 11.10. The plaintiff's position was that s 322(1) of the WIM Act required the Appeal Panel to apply Guideline 11.10, with the result that no deduction would be made from the assessed level of permanent impairment of 21%; the first defendant's position was that, notwithstanding what was contained in Guideline 11.10, s 323(1) required an appropriate deduction to be made (if, on the facts, it was found that some part of the plaintiff's then current impairment was attributable to a pre-existing condition, whether or not that condition was, at the relevant time, symptomatic).
10. Although I have read into the reasons of the Appeal Panel a view that Guideline 11.10 was inconsistent with s 323(1), the Appeal Panel did not say so explicitly. Neither party addressed the issue. That being the case, I considered it appropriate to defer ruling on the plaintiff's application until the parties had had the opportunity to consider and make submissions with respect to the potential inconsistency. Each provided written submissions. The plaintiff maintained: (i) that there is no inconsistency between Guideline 11.10 and s 323(1); and, even if there were: (ii) Guideline 11.10 overrides s 323(1).
11. The submissions made on behalf of the plaintiff went further. They went so far as to assert that: "The consequence of Guideline 11.10 is that, as a matter of fact, a pre-existing condition will contribute to a current impairment to the extent that it was causing an assessable impairment prior to the subject inquiry"; and "… The Guidelines determine that an asymptomatic condition does not relevantly contribute to the subsequent condition. Under the Guidelines (which must be applied) there is no conclusion that an asymptomatic condition contributed to the level of impairment due to the subsequent work injury."
12. The first defendant argued that no distinction is made in s 323(1) between physical and psychiatric injury, and that previous decisions of this Court with respect to physical injury (see [44]-[47] of the preliminary reasons) are equally applicable to psychiatric injury. To the extent that Guideline 11.10 provides otherwise it is inconsistent with s 323(1) and must give way.

Inconsistency

1. The plaintiff's submissions denying inconsistency between s 323(1) and Guideline 11.10 avoided the real issues. It was contended (correctly) that it is not every case in which a pre-existing condition can be identified that will result in a deduction under s 323(1). It is always a matter for assessment whether any proportion of the impairment assessed is due to such a pre-existing condition. So much is uncontroversial and has long been recognised: see Matthew Hall Pty Ltd v Smart [2000] NSWCA 284; (2000) 21 NSWCCR 34; Cole v Wenaline Pty Ltd [2010] NSWSC 78; Vitaz v Westform (NSW) Pty Ltd [2011] NSWCA 254; Ryder v Sundance Bakehouse [2015] NSWSC 526.
2. The more important question, which the plaintiff's submissions did not address, is whether a pre-existing condition, notwithstanding that it is asymptomatic at the time of the injury in respect of which the assessment is undertaken, may, nevertheless, contribute to the degree of impairment. In respect of physical injuries, it has long been held that it can: Government Cleaning Service v Ellul (1996) 13 NSWCCR 344; Matthew Hall Pty Ltd v Smart [2000] NSWCA 284; (2000) 21 NSWCCR 34; Elcheikh v Diamond Formwork (NSW) Pty Ltd (In Liquidation) [2013] NSWSC 365 at [91] and [95].
3. In the light of this consistent line of authority, s 323(1) must be construed as requiring deduction from the assessment of the degree of permanent impairment of any proportion of the impairment that is due to "previous injury … or … pre-existing condition or abnormality", whether or not the pre-existing condition or abnormality is symptomatic at the time of injury. As noted in the preliminary reasons, the cases which have previously considered this question all related to physical injury. However, as was observed on behalf of the first defendant, s 323(1) does not distinguish between physical and psychiatric or psychological injuries. It applies to all injuries equally.
4. Guideline 11.10, with its focus on "pre-injury level of functioning", does not allow for deduction from the assessment of impairment in cases where an asymptomatic pre-existing condition contributes to the degree of permanent impairment assessed. To the extent that Guideline 11.10 excludes consideration of any contribution to the permanent impairment that might be made by an asymptomatic pre-existing condition, it is inconsistent with s 323(1).
5. Moreover, if it were to be accepted, as was asserted on behalf of the plaintiff in submissions in reply, that Guideline 11.10 determines that an asymptomatic condition does not materially contribute to the subsequent condition, or, as is asserted in the relevant paragraphs of those submissions (extracted at [13] above), does not do so unless it was causing "an assessable impairment" prior to the injury in respect of which the assessment is made, the conclusion that Guideline 11.10 is in conflict with s 323(1) is reinforced. As was submitted on behalf of the first defendant, s 323(1) makes no distinction between physical and psychiatric/psychological injury. There may be good reason to issue, in respect of the latter, a guideline that prescribes a different procedure from a guideline with respect to the former. But that can be done only in conformity with the legislation. There is nothing in s 323(1) that authorises exclusion of asymptomatic pre-existing conditions as causative or partially causative of a subsequent impairment.
6. On the assumption that the authorities identified in [16] above were correctly decided (and it has not been suggested that they were not), the same reasoning must apply to psychiatric/psychological injury.
7. It is quite true, as the plaintiff insisted, that not every pre-existing condition will be a contributing cause of the permanent impairment. But that is a different question.

The consequences of inconsistency

1. The principal focus of the plaintiff's submissions lay in the consequences of any inconsistency found. He argued that, to the extent that a conflict between Guideline 11.10 and s 323(1) is exposed, it is the Guideline that must prevail. This, he argued, "results from the unambiguous words" of s 322, that is that "the assessment of the degree of permanent impairment … is to be made in accordance with Workers Compensation Guidelines …" (emphasis added). Further, s 323(1) provides no mechanism for the determination of the degree of permanent impairment other than by the application of the Guidelines (in the case of physical injury, Guideline 1.28, extracted in [10] of the preliminary reasons; in the case of psychological or psychiatric injury, Guideline 11.10). It is, the plaintiff argued, "left totally to the Guidelines to determine on what basis an assessment is to be made and what matters are relevant to the assessment"; if Guideline 11.10 were to be found to be inconsistent with s 323(1), then, unless the Guidelines took precedence over the statutory provision, there would be no means of assessing the degree of permanent impairment caused by the admitted psychiatric injury.
2. No authority was advanced for the proposition that, in the event of inconsistency, the Guidelines should prevail over the legislation. Reliance was placed purely on the language of s 322(1) and 323(4). For reasons I will come to, subs (4) does not avail the plaintiff.
3. The proposition that a guideline inconsistent with statute could take precedence is contrary to authority. In the preliminary reasons I referred to Henderson v QBE Insurance (Australia) Ltd [2013] NSWCA 480. The remarks made by Beazley P, although obiter and brief, are orthodox and conventional, and reflect numerous decisions before and since: see, for example, Jubb v Insurance Australia Ltd (2016) 76 MVR 228; [2016] NSWCA 153 at [31]. True it is that they were made in the context of the Motor Accidents Compensation Act 1999 (NSW) ("MAC Act") but, as will be seen below, they are applicable to relevantly similar provisions of the WIM Act. In McKee v Allianz Australia Insurance Ltd (2008) 71 NSWLR 609; [2008] NSWCA 163 ('McKee') Allsop P, also in reference to guidelines issued under the MAC Act, said at [6]: "Guidelines issued under the [MAC Act], s 44(1)(d) might deal with procedures for the referral of review of assessments or the procedure for assessment, but any such guidelines would not help in understanding the content of the [MAC Act], by reference to which the limits of the power of the review panel are to be identified."
4. Basten JA said, at [95]: "There are three reasons why this guideline provides no assistance to the respondent. The first is the general proposition that a guideline issued under the [MAC Act], although it may have effect as delegated legislation (see s 44(7)), cannot provide a basis for construing a provision of the Act so as to confer a broader jurisdiction on the review panel than that conferred by the Act, absent express statutory power to that effect. … The third reason is, pursuant to s 44(1)(d) of the [MAC Act], the Authority is empowered to issue guidelines with respect to 'the procedures for the referral of disputes for assessment or review of assessments, and the procedure for assessment, under Part 3.4'. A guideline which purported to affect the scope of the assessment, as provided for in the [Act], would be invalid."
5. Again with reference to the MAC Act, in Frost v Kourouche (2014) 86 NSWLR 214; [2014] NSWCA 39 ('Frost'), Leeming JA, with whom Beazley P and Basten JA agreed, said (at [44]-[45]): "It is plain that this Act leaves the detail of its operation to be set out in guidelines. In particular, s 65(1) provides that medical assessments are subject to the relevant provisions of the Authority's guidelines relating to the procedures for the referral of disputes for assessment, review of assessment, and the procedure for assessment. … However, contrary to the appellant's submissions, it is not legitimate to resort to the guidelines in order to understand the content of the Act, including the limits of the power of a review panel [citing the paragraphs of McKee extracted above]. If in truth the Act, as construed in accordance with the common law in the manner stated in Plaintiff s 10/2011 [Plaintiff s 10/2011 v Minister for Immigration and Citizenship (246) CLR 636; [2012] HCA 31] impliedly requires content to be given to the obligation to accord natural justice in a way which is inconsistent with the guidelines, then the guidelines must yield to the Act."
6. An attempt was made on behalf of the plaintiff to distinguish Frost and McKee, on the basis that they involved guidelines issued under the MAC Act. No relevant distinction was identified.
7. The submission was maintained that s 322(1) "gives precedence" to the Guidelines. There is nothing in either s 376 or s 323(4) that authorises the issue of guidelines that are inconsistent with any provision of the WIM Act. It is implicit, even if not expressly stated, in any conferral of power to make regulations, guidelines, or any other kind of delegated legislation (if that is what guidelines are) that the exercise of the power be consistent with the provisions of the legislation under which the power is conferred. So much is explicit in s 323(4), on which the plaintiff placed some weight. Subsection (4) authorises the State Insurance Regulatory Authority to make provision "for or with respect to the determination of the deduction required by this section" (emphasis added). That leads inexorably back to subs (1), construed in accordance with established authority.
8. I have therefore concluded that Guideline 11.10 of the Workers Compensation Guidelines is, to the extent that it excludes, in the application of s 323(1) of the WIM Act to any psychiatric or psychological impairment, consideration of any contribution made to the impairment by a pre-existing but asymptomatic condition, inconsistent with s 323(1) and invalid.
9. Apart from the issue of the "treatment effect", with which I dealt in the preliminary reasons ([66]-[69]), the only basis for the challenge made to the decision of the Appeal Panel was that it failed to make its determination in accordance with Guideline 11.10. The consequence of my conclusions above is that there was no error in the Appeal Panel taking that course.
10. As set out in the preliminary reasons ([4]), the relief sought by the plaintiff was: 1. a declaration that the decision of the Appeal Panel is void and of no effect; 2. an order setting aside the decision (and the statement of reasons) of the Appeal Panel; and 3. an order that the matter (that is the s 327 appeal to the Appeal Panel) be remitted to the Appeal Panel or the Registrar (of the Workers Compensation Commission) to be determined according to law.
11. The first defendant did not conduct the application on the basis that any determination, order or declaration ought to be made concerning the validity of Guideline 11.10.
12. In the preliminary reasons, I held that in revoking the increment of 2% allowed by the AMS for "the treatment effect", the Appeal Panel denied the plaintiff procedural fairness, and that it should not be permitted to re-argue that issue.
13. In the circumstances, it seems to me that the appropriate response to the plaintiff's application ought to be: 1. a declaration that, to the extent that the Appeal Panel varied the allowance made by the approved medical specialist for the "treatment effect" for which Guideline 1.32 of the Workers Compensation Guidelines makes provision, the plaintiff was denied procedural fairness and the decision of the Appeal Panel is, in that respect, void and of no effect; 2. an order that the decision of the Appeal Panel, to the extent that it varied the allowance made by the approved medical specialist for the "treatment effect" for which Guideline 1.32 of the Workers Compensation Guidelines provides, be set aside. 3. that the application be otherwise dismissed.
14. I do not propose to remit the matter for further consideration of the allowance for the "treatment effect". As set out in the preliminary reasons, the first defendant did not, on its appeal to the Appeal Panel, challenge the allowance made by the AMS. It should not now be permitted to do so.
15. The first defendant sought to defend the Appeal Panel's determination with respect to the allowance for the "treatment effect" on the basis of the decision of Garling J in Drosd v Workers Compensation Nominal Insurer [2016] NSWSC 1053, to the effect that, on having found error in a MAC issued by an AMS, an obligation lay on the Appeal Panel to undertake a full assessment of the plaintiff's permanent impairment. That may be so, but the obligation of the Appeal Panel was also to do so in accordance with the issues presented to it for determination, which did not, in this case, include any issue as to the allowance made by the AMS. That allowance should be restored.
16. It will be necessary for the parties to bring in short minutes of order that will give effect to these reasons. I direct accordingly.

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