1 I should say that Redlich JA, who is absent, has authorised me to say that he agrees in the reasons of the Court, which I now invite Weinberg JA to deliver.

2 By originating motion filed on 28 May 2007 in the County Court, the appellant sought pursuant to s 134AB(16)(b) of the Accident Compensation Act 1985 ('the Act') leave to commence proceedings for the recovery of damages for injuries suffered in the course of her employment between October 1999 and October 2002.

3 The appellant relied upon paragraph (c) of the definition of 'serious injury' contained in s 134AB(37) of the Act in respect of several psychiatric conditions variously described as Panic Disorder, Agoraphobia, Anxiety, Adjustment Disorder with Mixed Anxiety and Depressed Mood and Major Depressive Disorder. She sought leave to recover damages for both pain and suffering and loss of earning capacity.

4 The proceedings came on for trial before the County Court in July 2009. The only witnesses to give evidence were the appellant and her treating psychiatrist, Dr Joe Black. The remainder of the evidence consisted of exhibits drawn from the Court Books, all of which were tendered without objection.

5 The appellant's case was that during the course of her employment she was exposed to bullying and intimidatory conduct by various managers of the respondent Council. The only issue raised for determination at that stage was whether or not she had established that her condition was relevantly a 'serious injury'.

6 The trial judge refused the appellant leave to commence proceedings, and ordered her to pay the respondent's costs. In summary, though it was accepted that the appellant had, as a consequence of her employment with the respondent, suffered a mental disorder, his Honour did not accept that her condition should be characterised as a permanent severe mental or behavioural disturbance or disorder. He rejected the opinion of the appellant's treating psychologist on the grounds that he considered her methodology to be unreliable. In addition, he noted that there was no evidence that her treating general practitioner considered that she had a mental disorder which was both severe and permanent. To the contrary, the evidence contained in the doctor's various reports suggested that she would be able to move forward with respect to her anxiety, depression, and panic attacks once the litigation was over.

7 Another relevant factor, in his Honour's opinion, was the evidence that there had been substantial periods throughout the seven years or so that had elapsed since the appellant had left the respondent's employ during which she had little or no treatment for any mental disorder. She had commenced seeing Dr Black in early 2004 and attended him for counselling until August 2005, but had not resumed treatment with him until March 2008. She generally used only Serepax, a mild tranquiliser. It was only after she recommenced treatment with Dr Black in March 2008 that she began taking anti-depressant medication, at least on a regular basis.

8 Next, the trial judge noted that although the appellant's depressive and anxiety condition had persisted, her condition had fluctuated in severity over the entire period between 2002 and 2009. In August 2005, Dr Black had considered her to be 'brighter, more positive, sleeping better and contemplating social activities'. Between August 2005 and March 2008 she went overseas with her husband, successfully completed a tertiary visual arts course, and had applied for some 20 jobs, before deciding not to pursue further employment. In June 2008 Dr Black considered that there had been 'positive improvement' in her condition. In July 2008 Dr Albert Kaplan described her adjustment disorder as mild, and her panic disorder as having subsided in severity. Dr Michael Epstein also reported improvement at that time.

9 The final factor that influenced the trial judge in arriving at his conclusion was the evidence that the litigation process, and the associated intrusion into the appellant's life, had contributed significantly to her stress. In his Honour's view, that had caused her condition to deteriorate. There was medical and psychiatric opinion to support that conclusion.

10 It was on the basis of this evidence that his Honour concluded that the appellant's mental disorder had not been shown to be a permanent and severe mental disorder. That led to the refusal of leave to recover damages for pain and suffering.

11 For much the same reason, the trial judge refused leave on the basis of a loss of earning capacity. He was not persuaded that any such loss equated to 40 per centum or more. He noted that the appellant's case was that she had no earning capacity. He rejected that contention, concluding that as a consequence of her mental disorder she had an impaired earning capacity but one that would improve once the litigation had been brought to an end. Accordingly, leave was refused with respect to pecuniary loss.

12 By notice of appeal filed on 27 August 2009, the appellant challenges the refusal to grant leave in relation to both pain and suffering and loss of earning capacity. She identifies several errors of law that she contends were made, these being essentially as follows:

• the trial judge erred in failing to find that the appellant suffered injury arising out of, or in the course of, or due to the nature of employment with the respondent and/or that employment caused compensable injury during that time;
• the trial judge failed to reason in accordance with the evidence which demonstrated the appellant's permanent severe mental or permanent severe behavioural disturbance or disorder measured by pain and suffering and/or loss of earning capacity as at the trial date;
• the trial judge's reasons did not demonstrate that the appellant's accepted compensable injury did not materially contribute to serious injury consequences as at the trial date; and
• the trial judge failed to consider, or did not give adequate reasons for rejecting, evidence of the appellant that she could not work due to susceptibility to severe and debilitating anxiety attacks, and various evidence in respect of the appellant's earning capacity given by Dr Black, Dr Kaplan and several other named medical practitioners.

13 The appellant submits that this Court should decide for itself that she suffered a permanent severe mental or permanent severe behavioural disturbance or disorder by reason of her diagnosed conditions of:

• major stress breakdown;
• anxiety;
• panic disorder with agoraphobia;
• major depressive disorders;
• chronic adjustment disorder,

measured in terms of pain and suffering and/or loss of earning capacity. The appellant further submits that the weight of the evidence is such that this Court should determine that she has no capacity for work, taking into account the matters referred to in s 134AB(38)(g) of the Act.

14 The appellant finally submits that this Court should order that:

• the appeal be allowed;
• the order of his Honour Judge Howie made 19 August 2009 be set aside;
• the appellant be granted leave to bring proceedings for the recovery of damages in respect of injuries sustained in the course of her employment with the respondent on and from 20 October 1999;
• in the alternative that the appellant's application be remitted to the County Court for re-hearing; [1]
• the respondent pay the appellant's costs of the appeal and of the trial below.

15 Some days before the appeal came on for hearing, the parties resolved at least the central issue that divided them as to its disposition. The respondent acknowledged that the appeal should be allowed, and agreed that the matter should be remitted to the County Court for re-hearing.

16 By letter dated 2 March 2011 the Court advised both parties that it needed 'to be satisfied that the orders of his Honour Judge Howie of 19 August 2009 are wrong or at least sufficiently problematic to warrant that they be set aside and a new hearing ordered'.

17 It did so on the basis that this was not a case involving merely a commercial dispute between private parties which had been resolved after trial and pending appeal, but a matter that called for this Court to be affirmatively satisfied that the proceeding should be remitted to the County Court for re-hearing. Any such disposition by this Court has resource implications for the administration of justice in this State, and involves costs to the community. In addition, it is desirable, in the interests of justice, that if the matter is to be re-heard, any error made at first instance is not replicated.

18 Accordingly, the parties were asked to file a brief joint or agreed submission identifying the error or errors made below which would warrant the appeal being allowed, and the matter being sent back for re-hearing. That request was made in accordance with the principles stated by the Full Federal Court in Telstra Corporation Ltd v Minister for Broadband, Communications and the Digital Economy.[2] That agreed submission was subsequently filed.

19 The parties identified two reasons why a remittal would be appropriate. The first concerned a ruling made by the trial judge. The second concerned the evidence of the appellant's treating psychiatrist, Dr Black.

20 In the course of the trial his Honour ruled that certain affidavit material sought to be relied upon by the respondent was inadmissible by reason of s 134AB(11)(a) of the Act. He did so on the ground that the affidavits in question, or at least the substance of them, had not been disclosed to the appellant in the response material, in accordance with s 134AB(7) and (8).

21 The respondent submits that in light of this Court's decision in Pravidur v Scental Pacific Pty Ltd,[3] which was, of course, delivered after the trial judge gave his decision in this case, that ruling is now seen to have been erroneous. That means, so it is submitted, that this appeal is not to be regarded as one that turns entirely upon whether this Court considers for itself that the appellant sustained a 'serious injury' but also entails a consideration of a significant procedural irregularity.[4]

22 It is further submitted that, as 'the ground of appeal' regarding this matter falls outside s 134AD of the Act, a re-hearing can properly be ordered pursuant to s 74(3) of the County Court Act 1958.

23 One problem with that submission is that there is no 'ground of appeal' before this Court which alleges specific error of that kind. Presumably what is contended is that were leave to be sought to raise such a ground, such leave would not be opposed.

24 A second difficulty with the submission is that it is by no means obvious that the ruling in question operated to the detriment of the appellant. It was, after all, the respondent's affidavit material that was excluded.

25 Be that as it may, there is more substance to the second point upon which the parties rely in support of the proposed consent orders. As noted earlier, the appellant's treating psychiatrist, Dr Black, attended to give oral evidence. His testimony was of pivotal importance to the appellant's claim. It seems that on the day he gave evidence, he had his children, aged 10 and 12 respectively, with him at

court. In his reasons for judgment, the trial judge observed that Dr Black was, in the circumstances, 'openly distracted from his professional responsibilities' by their presence, and that he 'manifested resentment'. The relevant passages in the transcript to which his Honour referred in his reasons for judgment amply bear out these conclusions.

26 The respondent accepts that it would be preferable in the interests of justice that the matter be re-heard so that Dr Black can express his opinion regarding the appellant free from circumstances of distraction and resentment. With respect, that seems to be a proper concession.

27 In these circumstances, the Court is persuaded that the appeal should be allowed and that the matter should be remitted to the County Court for re-hearing. We will order accordingly.

1. The appeal be allowed.
2. The orders of his Honour Judge Howie made 19 August 2009 be set aside.
3. The appellant's claim for leave pursuant to paragraph 134AB(16)(b) of the Accident Compensation Act 1985 be remitted to the County Court of Victoria for rehearing before a differently constituted Court.
4. The costs of the hearing before his Honour Judge Howie shall abide the result of the rehearing.
5. The respondent shall pay the appellant's costs of the appeal.

[1] This course is now available to this Court as a result of the repeal, in 2010, of s 134AD of the Act.

[2] [2008] FCAFC 7; (2008) 166 FCR 64 ('Telstra Corporation Ltd'). The case involved judicial review and, as such, the principles discussed therein may be different, in some respects, from those applicable to the resolution by consent of an appeal involving nothing more than a judgment that one party pay damages to another. In Citigroup Pty Ltd v Mason [2008] FCAFC 151; (2008) 171 FCR 96, the Full Federal Court expressed reservations as to the width of the approach taken in Telstra Corporation Ltd. However, the principles laid down in that case seem applicable to the appeal presently before this Court.

[3] [2010] VSCA 144.

[4] This submission assumes that s 134AD still has application to the disposition of this appeal. That point was not argued before us, and nothing more need be said about it. In any event, its disposition would not affect the actual outcome of this appeal.