Southwell v Qantas Airways Limited

Supreme Court of NSW|2024-02-27|Before: Wright J

Solicitors: LHD Lawyers (Plaintiff) Sparke Helmore (First defendant) File Number(s): 2023/00184270

Introduction

By a summons filed on 8 June 2023, the plaintiff, Mr Southwell, seeks judicial review of the decision made on 16 March 2023 by an Appeal Panel of the Personal Injury Commission (PIC) constituted under s 328 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (the 1998 Act) in relation to a medical dispute between Mr Southwell and the first defendant, Qantas Airways Limited. The second defendant is the President of the Commission and the third defendants are the members of the Appeal Panel.
The first defendant is the only active defendant. The President of the PIC and the Appeal Panel did not take any active part in the proceedings.

Assessment by the Second Appeal Panel

The Second Appeal Panel determined that it was not necessary for there to be a further medical examination. The Second Appeal Panel had before it all the documentation that was sent to the original Medical Assessor.
On 16 March 2023, the Second Appeal Panel revoked the MAC issued on 29 October 2021 assessing 15% WPI from the injury and issued a new MAC assessing the WPI from the injury at 14%.
The Second Appeal Panel accepted the findings of the original Medical Assessor based on the examination of Mr Southwell. On that basis, it was concluded that, in addition to the rating of 10% WPI attributable to the compression surgery, the Medical Assessor was correct to add 3% WPI for radiculopathy. In addition, the Second Appeal Panel considered that there was no demonstrable error by reason of the Medical Assessor assessing that Mr Southwell had 2% WPI due to the impact of his lumbar spine impairment on his activities of daily living. Furthermore, the Second Appeal Panel did not consider that the locked back incident while skiing in 2019 represented an injury separate from the injury suffered in August 2017, but was rather the manifestation of a symptom of his earlier injury. None of these aspects of the Second Appeal Panel's decision, which established an assessment of 15% WPI, was sought to be challenged in the present proceedings.
The aspect of the Second Appeal Panel's decision which was challenged by Mr Southwell related to the application of a 10% deduction for the proportion of the impairment that was said to be due to a "pre-existing condition", under s 323 of the 1998 Act. This was what led to the Second Appeal Panel's assessment of 14% WPI in the new MAC issued on 16 March 2023. In that regard, the Second Appeal Panel's reasoning was as follows: "49. The authorities relating to the requirements of s 323(1) of the 1998 Act are consistent and clear. In substance, a Medical Assessor must follow four steps. Firstly, the Medical Assessor must determine the level of a workers post-injury impairment, as at the time of assessment. Secondly, the Medical Assessor must identify whether a worker has suffered an earlier injury or has a pre-existing condition or abnormality. Thirdly, the Medical Assessor must determine whether a proportion of the workers post-injury impairment is due to that earlier injury or pre-existing condition, which requires the Medical Assessor to be satisfied that the earlier injury or pre-existing condition makes a difference to the outcome for the worker. Lastly, the extent to which a workers post work injury impairment is due to the earlier injury or pre-existing condition or abnormality must be determined. 50. This process must be completed by reference to the evidence and not by reference to assumption or hypothesis. However, with respect to the fourth step, if a deduction is required to be made under s 323(1) and it would be too difficult or costly to determine the extent of the deduction to be made, because of the absence of medical evidence or some other reason then in that circumstance the deduction to be made under s 323 (1) can be assumed, in accordance with s 323(2) of the 1987 [sic] Act, to be 10%. However, s 323(2) makes clear that that assumption cannot be made if it is at odds with the evidence. The deduction cannot be arbitrarily determined. 51. The respondent suffered a back injury in 2002 for which he received conservative treatment in the form of physiotherapy and for which he needed to take one or two months off work and which thereafter resulted only in intermittent back pain which he reported to the Medical Assessor as being an episode of pain lasting one or two days every year or so. After taking one to two months off work following his suffering that injury, the respondent was able to perform his normal duties until he suffered injury again on 18 August 2017. There were no radiological investigations taken at the time he suffered his injury on 18 August 2017. The first investigation done after the respondent suffered that injury was a CT scan on 1 October 2019 which, as set above, revealed canal stenosis from L3 to L5. An MRI examination done shortly after that investigation revealed multi-level spondylotic change in his lumbar spine and the disc protrusions at L1/2, L2/3, L3/4 and L4/5 with interior migration of disc material at that level of approximately 16 mm. The MRI revealed that at the L5/S1 there was left foraminal stenosis compressing the left L5 nerve root. 52. That investigation as well as the CT scan indicate substantial degeneration of the respondent's spine. Whilst they were done approximately two years after the respondent suffered injury, the Appeal Panel considers, given the extent of the degeneration revealed in the investigations, that in all likelihood at the time the respondent suffered injury on 18 August 2017 he had significant degeneration in his lumbar spine. Given that he was only briefly troubled each year by back pain, the degeneration in his spine at the time he suffered injury was essentially asymptomatic. Nevertheless, in the Appeal Panel's view, the degeneration was such that it contributed to the injury the respondent suffered on 18 August 2017, which was a disc rupture. This is because without the degeneration that was existing in the respondent's lumbar spine as at 18 August 2017 he would not had [sic] suffered injury, and hence the degeneration in his spine as at 18 August 2017 makes a difference to the outcome for the respondent. It contributes to his present impairment. 53. The Appeal Panel considers that a proportion of the respondent's post injury impairment is therefore due to the pre-existing degeneration in his lumbar spine because. To repeat, in slightly different words, without the degeneration in his lumbar spine as at 18 August 2017, it is unlikely that he would have suffered the disc rupture or his present impairment. The pre-existing degeneration in his lumbar spine makes a difference to the respondent's present impairment. 54. As the appellant submitted the Medical Assessor did not provide any cogent explanation for his conclusion that no proportion of the respondent permanent impairment was due to a pre-existing condition or abnormality. He did not explain his reasons for forming his opinion that the respondent did not have any pre-existing conditions or abnormalities. By not doing so he has heard such that the MAC contains a demonstrable error. Further, he has not based his assessment on the correct criteria because he did not consider s 323. 55. As the Appeal Panel has just stated the respondent did have a pre-existing condition at the time he suffered injury and that a proportion of his permanent impairment is due to that pre-existing condition. It is near impossible however to determine exactly what that proportion would be. Consequently, the Appeal Panel assumes in accordance with s 323(2) that it is 10% which is not at odds with the available evidence." (Footnotes omitted)

The judicial review application

As noted above, on 8 June 2023, Mr Southwell filed his summons seeking judicial review of the Second Appeal Panel's decision.

Orders sought

In his summons, Mr Southwell seeks the following orders: "1 A Declaration pursuant to s 69 of the Supreme Court Act 1970 (NSW) that the decision and the statement of reasons for decision of the third defendant and issued by the second defendant is void and of no effect. 2 An Order setting aside the decision and the statement of reasons for decision of the third defendant and issued by the second defendant. 3 An Order, including by way of mandamus, remitting the matter to the Second Defendant and a direction that a differently constituted Appeal Panel constituted under section 328 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) issue a certificate that the Plaintiff's degree of permanent impairment is 15 per cent. 4 In the alternative to Order 3, An Order, including by way of mandamus, remitting the matter to the Second Defendant for determination according to law by a differently constituted Appeal Panel constituted under section 328 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW). 5 Such further Order as this Honourable Court deems necessary to give effect to the Plaintiff's claims in the nature of judicial review. 6 If a Defendant is a contradictor, an Order that such Defendant pay the Plaintiff's costs of the proceedings."

Grounds of review

The grounds of review identified in the summons were said to involve both jurisdictional error and error of law on the face of the record and were formulated as follows: "(a) Deduction under s 323 of the 1998 Act: The Appeal Panel erred in determining a 1/10th deduction under s 323. The Appeal Panel erred in failing to address, and in failing to make findings and in failing to give reasons, the required factual determination under s 323 as to whether the impairment assessed after the workplace injury is greater by reason of the pre-existing condition. The Appeal Panel erred by failing to act on the circumstances that there was no probative evidence that permitted a finding that the impairment as assessed after the workplace injury is greater by reason of the pre-existing condition, which meant that the Appeal Panel erred in concluding that the Assessor was in error and which meant that the Appeal Panel's consideration and new erred because the Appeal Panel ought to have found that there should be no deduction under s 323. (b) Reason: The Appeal Panel in erred failing to comply with its reason obligation. The Appeal Panel stated in paragraph 53 'because [missing reason]'."
Before turning to address the grounds, it is useful to note that the level of WPI suffered by Mr Southwell is relevant to his entitlement to claim modified common law damages in accordance with Pt 5 of the 1987 Act, by virtue of s 151H of the 1987 Act, and the quantum of compensation for permanent impairment to which he may be entitled under s 66 of that Act. By virtue of ss 65(1) and 151H(4), the degree of WPI is to be assessed as provided in Ch 7, Pt 7 of the 1998 Act, which Part includes s 323.
Since ground (b) raises a discrete and limited point concerning the form of the reasons, it is helpful to deal with that ground first.

Ground (b)

The substance of ground (b) was that the Second Appeal Panel failed to comply with its obligation to give adequate reasons because at [53] the Panel's reasons included the following: "The Appeal Panel considers that a proportion of the respondent's post injury impairment is therefore due to the pre-existing degeneration in his lumbar spine because. To repeat, in slightly different words, without the degeneration in his lumbar spine as at 18 August 2017, it is unlikely that he would have suffered the disc rupture or his present impairment."
In particular, Mr Southwell's submissions drew attention to the fact that there was a full stop after the word "because" and that word was clearly intended to be followed by an explanation providing a reason for the preceding conclusion but there was no such explanation. Thus, it was said that there was a failure to provide adequate reasons for the decision in that regard.
In response, Qantas submitted, in effect, there was an obvious and complete explanation for this apparently anomaly, namely, that it was a word processing error when a full stop was typed instead of a comma.
I accept Qantas's submission. I am more than comfortably satisfied that what occurred was that when, in error, a full stop was typed instead of a comma after "because", the word processing program capitalised the first letter of the next word "To". If "because" is followed by a comma and "To" does not have the first letter capitalised, this portion of the Second Appeal Panel's reasons reads naturally and sensibly as: "The Appeal Panel considers that a proportion of the respondent's post injury impairment is therefore due to the pre-existing degeneration in his lumbar spine because, to repeat, in slightly different words, without the degeneration in his lumbar spine as at 18 August 2017, it is unlikely that he would have suffered the disc rupture or his present impairment."
There was, thus, in fact no reasoning or explanation intended to be included which was left out. Nor was there any failure to comply by the Second Appeal Panel with its duty to give adequate reasons.
Thus, in my view, ground (b) should be rejected and the reasons of the Panel should be read in the manner I have indicated.

Ground (a)

Although ground (a) is expressed somewhat discursively, its substance was that a deduction under s 323 of the 1998 Act could only be made if it was concluded that the level of impairment assessed as a result of the 2017 injury was "greater" as a result of the pre-existing condition and there was no basis in the evidence for such a conclusion in the present case nor was such a conclusion reached by the Second Appeal Panel. Thus, it was submitted that s 323 was not engaged in Mr Southwell's case and the assessment of WPI should not have been reduced from 15% to 14%.

Submissions

Mr Romaniuk of Senior Counsel who appeared for Mr Southwell submitted that where, as in this case, the question to be determined under s 323 related to the impact of a pre-existing condition there were essentially three elements: 1. a causal inquiry as to whether the workplace injury was causally related to the pre-existing condition; 2. a factual determination that the impairment assessed was "greater" by reason of the pre-existing condition; and 3. a deduction to reflect the situation determined in the second element. If the second element was not made out, there should be no deduction under the third element.
In respect of the second element, it was submitted that the applicable approach was as set out by Campbell J in Ryder v Sundance Bakehouse [2015] NSWSC 526 (Ryder) at [45]. Based on that approach, it was submitted that the Second Appeal Panel did not grapple with the necessary factual inquiry in the second element. Mr Southwell's contention was that the Second Appeal Panel, in effect, impermissibly relied upon the assumption in s 323(2) to jump to the third element without making the determination required by the second element namely whether, on the evidence, the pre-existing condition led to the degree of impairment being assessed as "greater".
Dr Blount of counsel who appeared for Qantas submitted that the Second Appeal Panel set out the relevant principles derived from Ryder and other relevant authorities at [49] of their reasons (which have been quoted above). It was contended that, although the Second Appeal Panel effectively said that "the earlier injury or pre-existing condition [must] make… a difference to the outcome" rather than "but for the earlier injury or pre-existing [condition] the outcome would not have been as great", there was no legal distinction to be drawn between the two formulations.
It was then submitted in substance that, having found that there the pre-existing degeneration of the lumbar spine contributed to the injury, the Second Appeal Panel was entitled to make "the finding of contribution" even though the degeneration of the spine was asymptomatic, in light of what was said by the Court of Appeal in Vitaz v Westform (NSW) Pty Ltd [2011] NSWCA 254 at [43].
It was contended that the Second Appeal Panel specifically addressed the element of the "difference" made by the pre-existing condition at [52] and [53] of its reasons by finding that if there had not been pre-existing degeneration it was unlikely that Mr Southwell would have suffered the injury in August 2017 at all and thus the pre-existing condition made a difference. It was said that "[i]t goes without saying that without the pre-existing condition the degree of impairment resulting from the work injury would not have been as great because there would have been no injury".
Qantas also made a number of more specific submissions concerning: what it said was the confusing use of the term "pathology" in Mr Southwell's submissions; the alleged absence of a "no evidence" ground of review in the summons; and, the contention that Mr Southwell's complaint amounted in substance to disagreement with the Second Appeal Panel's factual findings and that merits review of such a finding was not available in these proceedings.

Consideration

As noted above, the assessment of WPI is to be in accordance with Pt 7 of Ch 7 of the 1998 Act and the most relevant provision in that Part for present purposes is s 323 which provides: "323 Deduction for previous injury or pre-existing condition or abnormality (1) In assessing the degree of permanent impairment resulting from an injury, there is to be a deduction for any proportion of the impairment that is due to any previous injury (whether or not it is an injury for which compensation has been paid or is payable under Division 4 of Part 3 of the 1987 Act) or that is due to any pre-existing condition or abnormality. (2) If the extent of a deduction under this section (or a part of it) will be difficult or costly to determine (because, for example, of the absence of medical evidence), it is to be assumed (for the purpose of avoiding disputation) that the deduction (or the relevant part of it) is 10% of the impairment, unless this assumption is at odds with the available evidence. (3) The reference in subsection (2) to medical evidence is a reference to medical evidence accepted or preferred by the medical assessor in connection with the medical assessment of the matter. (4) The Workers Compensation Guidelines may make provision for or with respect to the determination of the deduction required by this section. (5) (Repealed)."
It was expressly accepted that in the present case that the Workers Compensation Guidelines made no relevant provision.
Thus, where, as in the present case, there was a pre-existing condition at the time of the workplace injury, s 323(1) relevantly required that, in assessing the degree of permanent impairment resulting from the injury, "there is to be a deduction for any proportion of the impairment … that is due to any pre-existing condition".
Although the parties did not make specific submissions concerning the construction of particular words in s 323(1), the text of s 323(1) and its context, as well as the legislative history referred to below and the scope and purpose of the 1998 Act, indicate that the word "proportion" should be construed as referring to a "portion" or "part", when considered in relation to the whole, of the degree or level of impairment. In addition, the words "due to" in relation to any previous injury, or pre-existing condition or abnormality, should be construed as meaning due to those previous or pre-existing matters and not due to the workplace injury under consideration. Otherwise, there would be no satisfactory logical basis for the deduction mandated under the section. The authorities which have considered this section, some of which are referred to in more detail in the paragraphs which follow, are consistent with this construction of s 323(1).
Thus, s 323(1) requires the assessment to focus upon whether there is any portion or part of the impairment suffered which is due to any pre-existing condition but which is not attributable to the workplace injury. If that is so, there is to be a deduction of the proportion of the whole represented by that part or portion. At that point, s 323(2) may have a role to play. Section 323(2) provides for the situation where the extent of such a deduction will be difficult or costly to determine. In such a case, subs (2) establishes that the deduction is to be 10% of the impairment, unless that assumption is at odds with the available evidence.
On its terms, however, s 323(2) does not apply if it has not been determined that a deduction is to be made under subs (1) because a part or portion of the level of impairment suffered was due to the pre-existing condition. Subsection (2) relates only to "the extent of a deduction under this section" not to whether such a deduction is required. As Schmidt J held, in effect, in Cole v Wenaline Pty Ltd [2010] NSWSC 78 (Cole) at [30] and [31], s 323(1) does not permit the assessment of whether a deduction is required to be made on the basis of an assumption or hypothesis, that once there is found to be a particular pre-existing condition, it will always, "irrespective of outcome", contribute to the impairment flowing from any subsequent injury. Rather, the assessment of whether a deduction is required must have regard to the evidence as to the actual consequences of the pre-existing condition and whether any proportion of the permanent impairment present after the workplace injury was due to the pre-existing condition.
Thus, it has been held, in cases such as Elcheikh v Diamond Formwork (NSW) Pty Ltd (in liq) [2013] NSWSC 365 at [126] (Schmidt J) and Secretary, Department of Communities and Justice v Lewandowski [2023] NSWSC 334 at [52] (Griffith AJ), that what must be determined under s 323 involves, at least, three enquiries: "• Firstly, what the extent of the resulting impairment is. • Secondly, whether the pre-existing condition contributed to the impairment. • Thirdly, if it did, what proportion of the impairment was due to the pre-existing condition."
In light of the construction referred to above, however, the formulation of the second of these three enquiries may, in a case such as the present, misdirect consideration, if it were thought that all that had to be established was that the pre-existing condition was causally related in some way to subsequent workplace injury and the impairment suffered as a result of that injury, without any part or portion of that level of impairment being due to the pre-existing condition and not the injury.
It is important to bear this in mind when considering the submissions on behalf of Qantas which placed some emphasis on the principle stated in Vitaz v Westform (NSW) Pty Ltd [2011] NSWCA 254 (Vitaz) at [43] (Basten JA, McColl JA and Handley AJA agreeing). That principle was formulated in the following terms: "if a pre-existing condition is a contributing factor causing permanent impairment, a deduction is required even though the pre-existing condition had been asymptomatic prior to the injury". On the proper construction of s 323, this principle should not be understood as stating that if the pre-existing condition caused or contributed to the subsequent workplace injury, a deduction is required under s 323(1) without regard to whether a "proportion of the impairment" was due to the pre-existing condition alone. Nor can s 323(2) be relied upon to justify a deduction of 10%, absent a finding that that a portion of level of impairment suffered after the workplace injury was due to the pre-existing condition.
A very helpful review of the legislative history of s 323 and its predecessors and its implications for the construction and application of the section was given by Campbell J at [38]-[42] in Ryder v Sundance Bakehouse [2015] NSWSC 526 (Ryder), a case with significant similarities to the present. This passage touches upon the approach to be taken in light of the comment in Vitaz at [43] and it is worthwhile quoting the passage in full: "38. The legislative history of s 323 statutory predecessors, s 68A WCA in various forms, and its interpretation, is summarised by Giles JA (Mason P and Powell JA agreeing) in Matthew Hall Pty Ltd v Smart [2000] NSWCA 284 at [30] - [32] in the following terms: [30] The background to the original s68A, in the decisions referred to in the passage next set out, was explained in D'Aleo v Ambulance Service of New South Wales (NSWCA, 12 December 1996, unreported). In that case the appellant had pre-existing degenerative changes to her back, although they were asymptomatic. It was argued that a pre-existing condition which was asymptomatic and had not resulted in any prior impairment in the sense of physical disability or incapacity was insufficient to attract s68A. Cole JA, with whom Handley JA and Cohen AJA agreed, said - "The terms of s68A(1) are in my judgment tolerably clear. The employer who is liable in respect of an injury causing permanent impairment of the back, neck or pelvis is not liable in respect of 'any proportion of the loss that is due to' the factors referred to in (a) and (b). The circumstances referred to in (a) are those in respect of which compensation has been paid or is payable under Division 4. The approach of the courts in Rodios v Trefel [(1937) 11 WCR NSW 285], King v Hayward [(1943) 67 CLR 488] and TAFE v Pitt [(1993) 9 NSWLR CCR 309] is negated. However the legislature went further by enacting (b). Prior non-compensable injuries, pre-existing conditions or abnormalities result in a deductable [sic] proportion being determined for which the employer liable in respect of the injury causing the permanent impairment of the back, neck or pelvis is not to be responsible. The words 'any pre-existing condition' in my view include a degenerated back caused by the advent of age. Insofar as the permanent impairment of the back as found is due to that pre-existing condition, an appropriate deduction for the effects of the pre-existing condition is to be made. In the circumstances mentioned in subs(8), it is 10%." [31] In Government Cleaning Service v Ellul (1996) 13 NSWCCR 344 at 349 it had been said that s68A(1) was not concerned with any pre-existing condition or abnormality which was not causing any permanent impairment. Cole JA went on in D'Aleo v Ambulance Service of New South Wales to explain that, read in context, this meant that unless the pre-existing condition was a contributing factor causing permanent impairment, s68A(1)(b) had no application; so read, it was consistent with the view his Honour had earlier stated. In the result, therefore, it did not matter that the pre-existing condition had been asymptomatic, provided that the permanent impairment of the back as found was to some extent due to the pre-existing condition. [32] The same, in my view, must be said as to the current s68A(1). It does not matter that the pre-existing condition was asymptomatic, and if the loss is to some extent due to the pre-existing condition there must be deduction of the deductible proportion for that loss. But it is necessary that the pre-existing condition was a contributing factor causing the loss. And, of course, it is necessary that there was a pre-existing condition. (Emphasis added [in original]). 39. The continued application of this interpretation to s 323 was confirmed by Basten JA in Vitaz at [43] in the following terms: That opinion contained a legal assumption which is inconsistent with the approach adopted by this court in, for example, D'Aleo v Ambulance Service of New South Wales (NSWCA, 12 December 1996, unrep) (quoted by Giles JA, Mason P and Powell JA agreeing, in Matthew Hall Pty Ltd v Smart [2000] NSWCA 284; 21 NSWCCR 34 at [30]-[32] and, more recently, by Schmidt J in Cole v Wenaline Pty Ltd [2010] NSWSC 78 at [13]). The resulting principle is that if a pre-existing condition is a contributing factor causing permanent impairment, a deduction is required even though the pre-existing condition had been asymptomatic prior to the injury. In the absence of any medical evidence establishing a contest as to whether the pre-existing condition did contribute to the level of impairment, the complaint about a failure to give reasons must fail. An approved medical specialist is entitled to reach conclusions, no doubt partly on an intuitive basis, and no reasons are required in circumstances where the alternative conclusion is not presented by the evidence and is not shown to be necessarily available. 40. In Smart (at [33]) Giles JA emphasised that the questions of whether there is a pre-existing condition, and whether it is a contributing factor to the post-injury permanent impairment, are questions of fact. In Cole Schmidt J emphasised that it is inappropriate to assume that if a pre-existing condition, or injury, is made out on the evidence then it must contribute to the impairment ([28] - [30]). 41. … Where the issue is whether any proportion of the permanent impairment resulting from the work injury is due to a pre-existing condition, it is not necessary that the condition, pre-injury, of itself, would have given rise to a rateable percentage impairment by application of the diagnosis-related evaluation of impairment prescribed by the WorkCover Guides. 42. In the present context the critical question is the causation question which, expressed by adapting the terms of the statute is whether a portion of the 15 per cent whole person impairment Ms Ryder suffered as a result of her work injury was due to a pre-existing condition or abnormality i.e. degenerative disc disease. The argument advanced on behalf of Ms Ryder is effectively that the proportion must be capable of assessment in accordance with the WorkCover Guides for s 323(1) to be satisfied. With respect this overlooks the requirement that the section must be read as a whole and in its legislative context. Although s 323(2) does not use the word "proportion" it addresses the idea that in some, perhaps many, if not most, cases it may be "difficult or costly to determine" the relevant proportion. In that event, a rule of thumb ("assumption") of 10 per cent is to be adopted."
In Ryder, Campbell J rejected a proposition to the effect that a proportion of the impairment in that case could only be found to have been caused by the pre-existing degenerative disc condition, for the purposes of s 323(1), if it was capable of assessment in accordance with the WorkCover Guides. Nonetheless, in relation to what had been said in the Court of Appeal, including in Vitaz, his Honour concluded, at [43]: "the express words of s 323(1) require that some definite part, even if it is difficult or costly to assess in precise terms, of the impairment has been caused by, in this case, a pre-existing condition. But the interpretation adopted by the Court of Appeal is that the section is engaged if the pre-existing condition, or previous injury where applicable, is a concurrent necessary condition, with the work injury, of the degree of permanent impairment." (Emphasis in original)
This was further developed by Campbell J at [45] where it was said: "45. What s 323 requires is an inquiry into whether there are other causes, (previous injury, or pre-existing abnormality), of an impairment caused by a work injury. A proportion of the impairment would be due to the pre-existing abnormality (even if that proportion cannot be precisely identified without difficulty or expense) only if it can be said that the pre-existing abnormality made a difference to the outcome in terms of the degree of impairment resulting from the work injury. If there is no difference in outcome, that is to say, if the degree of impairment is not greater than it would otherwise have been as a result of the injury, it is impossible to say that a proportion of it is due to the pre-existing abnormality. To put it another way, the Panel must be satisfied that but for the pre-existing abnormality, the degree of impairment resulting from the work injury would not have been as great."
Applying that approach, Campbell J concluded at [47]-[48] that the Panel in that case fell into jurisdictional error by failing in the circumstances of that case to address, inter alia: 1. whether the injury suffered in the workplace injury "was worse because of the pre-existing [degenerative disc condition or] abnormality"; and 2. "the means by which the pre-existing abnormality in the disc as found by the Panel contributed causally to the level of impairment, as opposed to the occurrence of the injury" (emphasis added).
This approach is consistent with what was said in Vitaz at [43], when it is understood that the reference to "permanent impairment" in the principle stated by Basten JA was a shorthand reference to the "level of [permanent] impairment" as referred to later in that same paragraph. In other words, the principle in that case was to the effect that, even if a pre-existing condition was asymptomatic before a workplace injury but some portion of the level of impairment after the workplace injury was due to the pre-existing condition and not the injury, a deduction was required under s 323.
Applying the construction of s 323 set out above and the approach taken in previous authorities, in Mr Southwell's case the issues or questions which the Second Appeal Panel was required to consider under s 323(1) included most relevantly for present purposes: 1. whether and by what means the pre-existing disc degenerative condition, as found by the Second Appeal Panel, contributed causally to the level of impairment suffered after the August 2017 workplace injury, as opposed to the occurrence of the injury; 2. whether, in light of those findings, a portion or part of the level or degree of impairment after the workplace injury was due to the pre-existing condition and not the injury or, to use Campbell J's expression, was "worse" because of the pre-existing condition; and 3. if so, what deduction for that proportion (or portion or part) of the impairment should be made.
In determining the third issue, the Second Appeal Panel was not required to determine the precise extent of the portion or part of the level of impairment that was due to the pre-existing condition if such a determination was difficult or costly, as the assumption in subs (2) could be relied upon in that situation. Nonetheless, in order to determine whether any deduction was required under s 323(1), the Second Appeal Panel had to consider the second issue, whether the level of impairment was actually worse or greater due to the pre-existing condition in the sense that part of the level of impairment was due to the pre-existing condition and not the workplace injury. Furthermore, s 323(2) could not be relied upon to obviate the need to determine that issue, because subs (2) only operated once a finding had been made that the level of impairment was due, to some extent, to the pre-existing condition and not the workplace injury, even if the extent could not be precisely determined.
The Second Appeal Panel's relevant reasoning has been quoted above. It was found, at [52], that the CT scan in October 2019 and the MRI in November 2019 indicated substantial degeneration of Mr Southwell's spine such that "in all likelihood at the time [he] suffered injury on 18 August 2017 he had significant degeneration in his lumbar spine" but it was asymptomatic.
The Panel then reasoned, at [52], that the degeneration contributed to the injury suffered on 18 August 2017, which was a disc rupture, because without the degeneration he would not have suffered injury. This was a finding as to the causal relationship between the occurrence of the workplace injury in August 2017 and the pre-existing condition.
At [53], the Panel then stated that it considered that a proportion of Mr Southwell's post-injury impairment was "therefore due to the pre-existing degeneration in his lumbar spine because … without the degeneration in his lumbar spine as at 18 August 2017, it is unlikely that he would have suffered the disc rupture or his present impairment".
These findings at [53] amount to no more than a conclusion that the pre-existing condition was causally related to the occurrence of the injury and, consequently, the pre-existing condition caused the whole level of impairment that flowed from the injury. The Second Appeal Panel failed to address the required questions or issues, namely: 1. whether and by what means the pre-existing degenerative condition contributed causally to the actual level of impairment suffered after the August 2017 workplace injury, as opposed to the occurrence of the injury; and 2. whether, in light of the Panel's findings in those regards, a portion or part of the level impairment after the workplace injury was due to the pre-existing condition and not due to the injury, even though the precise extent of that portion or part was not required to be determined.
In other words, before the Second Appeal Panel could be satisfied that a portion or part of the level of impairment suffered by Mr Southwell was due to the pre-existing condition for the purposes of s 323(1), it was required to conclude that a part or portion was due to the pre-existing condition and not the workplace injury and a part or portion of the level of impairment was due to the workplace injury (alone or together with the pre-existing condition). If the only finding was that no level of impairment would have been suffered but for both the pre-existing condition and the workplace injury, it follows that no part or portion of the level of impairment was due to the pre-existing condition and not the workplace injury and, thus, s 323(1) was not engaged and no deduction was required under that section.
The Panel did not consider those issues. This was because the Second Appeal Panel's analysis in substance addressed the wrong question, stopping at the finding that the workplace injury only occurred because of the pre-existing condition and then proceeding on the basis that any resultant impairment would not have occurred at all, if not for the pre-existing condition. This is the substance of the Panel's words at [53]: "The Appeal Panel considers that a proportion of the respondent's post injury impairment is therefore due to the pre-existing degeneration in his lumbar spine [because, to] repeat, in slightly different words, without the degeneration in his lumbar spine as at 18 August 2017, it is unlikely that he would have suffered the disc rupture or his present impairment."
According to this reasoning, the "proportion of the respondent's post injury impairment" referred to by the Panel was the whole of the impairment because "without the degeneration in his lumbar spine as at 18 August 2017, it is unlikely that he would have suffered the disc rupture or his present impairment." On the construction referred to above, this is not a "proportion of the impairment … that is due to any pre-existing condition" referred to in s 323(1).
If contrary to the construction set out above: 1. the "proportion" referred to in s 323(1) could be the whole of the impairment, not a portion or part, suffered after a workplace injury; and 2. the level of impairment "due to the pre-existing condition" referred to in s 323(1) included any impairment also due to the workplace injury (for example because the injury would not have occurred but for the pre-existing condition), it would follow that, for any asymptomatic pre-existing condition without which a workplace injury would not have occurred, the "proportion of the impairment … due to the pre-existing condition" would always be the whole of the WPI assessed and the WPI attributable solely to the workplace injury would always be 0%. It is most unlikely that the Parliament intended s 323(1) to have such an operation.
For these reasons, the Second Appeal Panel's formulation of the test in relation to s 323(1) at [49] of its reasons that the section required the Panel to determine whether the "pre-existing condition makes a difference to the outcome for the worker" was inaccurate and led it into error. Where a workplace injury and the consequent impairment would not have been suffered but for a pre-existing, asymptomatic condition, the requirement in s 323(1) is not satisfied merely because the pre-existing condition "made a difference" in the sense that the worker had some impairment after the injury rather than no impairment because, without the pre-existing condition, the injury and impairment would not have been suffered.
In practical terms in Mr Southwell's case and on the proper construction of s 323 set out above, consideration of the required questions or issues could have been addressed by the Second Appeal Panel: 1. identifying each of the elements giving rise to the assessment of 15% WPI, namely 10% WPI attributable to the compression surgery, 3% WPI attributable to radiculopathy and 2% WPI due to the impact on his activities of daily living; and 2. determining whether there was any part or portion of the impairment relevant to each those elements, compared to the total for each assessment, which was solely due to the pre-existing condition and not the workplace injury (alone or together with the pre-existing condition).
If there were no evidentiary basis for finding that there was such a part or portion referred to in subpar (2) of the preceding paragraph, then it could not be relevantly concluded that there was "any proportion of the impairment … due to any pre-existing condition". This is the substance of Campbell J's reasoning in Ryder at [45] (which has been quoted above). It also provides the basis for some of his Honour's criticisms of the reasoning of the Appeal Panel in that case, at [47]: "…The whole reasoning process seems to be that there was desiccation shown in an MRI scan, in all likelihood it predated the injury; that was the disc that prolapsed when the injury happened; and therefore it is part and parcel of everything that follows, including the impairment. … nor is there any consideration of whether the resulting prolapse was worse because of the pre-existing abnormality; nor is there any express consideration of the means by which the pre-existing abnormality in the disc as found by the Panel contributed causally to the level of impairment, as opposed to the occurrence of the injury. …"
As a consequence of the Second Appeal Panel's failure to address the required issues or questions in the present case, there was no basis on which the Panel could properly conclude that "any proportion" of Mr Southwell's impairment was "due to any pre-existing condition". Moreover, there was also then no basis for the further conclusion that a deduction was required s 323(1). In those circumstances, the assumption in s 323(2) was not able to be relied upon, as that subsection only applies if a deduction under s 323(1) has been found to be required.
The Second Appeal Panel's failure to address the issues which it was required to address under s 323(1) amounted to jurisdictional error in that it involved a misunderstanding of the applicable law, addressing the wrong question or questions and identifying a wrong issue: LPDT v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs [2024] HCA 12 at [3] (Gageler CJ, Gordon, Edelman, Steward, Gleeson and Jagot JJ). Furthermore, that failure also involved corresponding errors of law on the face of the record. In these circumstances, it is not necessary to consider Qantas's more specific submissions referred to above.
For these reasons, ground (a) has been made out.

Relief

The errors established under ground (a) lead to the conclusion that the Second Appeal Panel had no proper basis for making any deduction under s 323(1). Consequently, its MAC issued on the basis that there should be such a deduction is liable to be set aside.
There were no discretionary factors raised by the parties, nor did I consider that there were any, which would justify the Court refusing to set aside the MAC issued by the Second Appeal Panel on 16 March 2023. In these circumstances, an order should be made quashing or setting aside the Second Appeal Panel's MAC, together with an order remitting the matter to the PIC for determination by a differently constituted Appeal Panel.
If the MAC is set aside, there would, in my view, be no utility in also making a declaration, as sought, that the Second Appeal Panel's decision to issue the MAC and its statement of reasons were void and of no effect, even if that were otherwise appropriate.
In addition, Mr Southwell also sought an order under s 69(3)(b) of the Supreme Court Act 1970 (NSW) directing the Appeal Panel which is to determine the appeal on remitter to issue a MAC certifying that Mr Southwell's WPI was 15%.
Section 69(3) of the Supreme Court Act provides: "(3) The jurisdiction of the Court to grant any relief or remedy in the nature of a writ of certiorari includes, if the Court is satisfied that the ultimate determination of a court or tribunal in any proceedings has been made on the basis of an error of law that appears on the face of the record of the proceedings - (a) jurisdiction to quash the ultimate determination of the court or tribunal, and (b) if the Court determines that, as a matter of law, only one particular determination should have been made by the court or tribunal, jurisdiction to make such judgment or orders as are required for the purpose of finally determining the proceedings."
Mr Southwell submitted that an example of such an order being made was found in Aquilina v Transport for NSW [2022] NSWSC 1310 (Aquilina) in which Brereton JA not only quashed a MAC issued under the 1998 Act but also ordered that the Appeal Panel in that case "issue a Medical Assessment Certificate certifying that the degree of permanent impairment resulting from the plaintiff's injuries in the subject of Personal Injury Commission Matter … is 15%": Aquilina at [15].
By virtue of the introductory words in s 69(3)(b), this type of order sought by Mr Southwell could only be made if the Court determined as a matter of law that only one particular determination should have been made by the Appeal Panel. In Aquilina, Brereton JA found, at [12], that the only determination which should have made by the appeal panel was a finding of 15% impairment and thus s 69(3)(b) was engaged. Part of the context for that finding was explained at [13] as follows: "Once the plaintiff's evidence and submissions were served, [the first defendant] put on submissions which conceded the matters advanced by the plaintiff, save for the degree of impairment which it contended was 15% (as has now been accepted by the plaintiff), as opposed to 16% as was initially contended for by the plaintiff."
Accordingly, in Aquilina there was no dispute between the active parties as to the WPI which should be assessed.
There is no similar undisputed assessment of WPI in Mr Southwell's case. Furthermore, since the error in the present case was the Second Appeal Panel's failure to address the required issues or questions for the purposes of s 323(1) of the 1998 Act, there were no factual findings in relation to those issues. As a consequence, I could not be satisfied that "as a matter of law, only one particular determination should have been made by the [Second Appeal Panel]". In this situation, it would not be appropriate to make any order under s 69(3)(b) of the Supreme Court Act that the Appeal Panel to whom the matter is to be remitted issue a MAC certifying that Mr Southwell's WPI was 15%. That is not to say, however, that the Court would not encourage the parties to attempt to reach an agreed position so as to obviate the need for a further determination by a third Appeal Panel, given the rather protracted course these proceedings have already taken.
Mr Southwell sought costs against the active defendant if he was successful. There were no circumstances to which the parties pointed which indicated that an order other than that costs should follow the event would be appropriate and I propose to so order.

Orders

For these reasons, the orders of the Court are: 1. The Medical Assessment Certificate issued by the third defendants on 16 March 2023 is set aside. 2. The matter is remitted to the Personal Injury Commission to be heard and determined by a differently constituted Appeal Panel under s 328 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) in accordance with law. 3. The first defendant is to pay the plaintiff's costs. 4. Otherwise, the summons filed on 8 June 2023 is dismissed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 03 May 2024

(1996) 13 NSWCCR 344

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