State Super SAS Trustee Corporation Ltd v Perrin

Relevant legislative provisions

1. The relevant provisions of the Police Regulation Act are the definitions of "hurt on duty" and "STC" in s 1(2) and ss 3, 10, 10B, 12D and 21, respectively.
2. The expression "hurt on duty", in relation to a member of the police force means injured in such circumstances as would, if the member were a worker within the meaning of the Workers Compensation Act 1987, entitle the member to compensation under that Act. "STC" is defined as the SAS Trustee Corporation continued under the Superannuation Administration Act 1996 (NSW) (the Administration Act).
3. Police Regulation Act s 3(1) establishes the "Police Superannuation Fund" which, subject to the Act, is under the control of STC. STC must pay out of the Fund, among others, the benefits provided by the Act: Police Regulation Act, s 3(3)(a).
4. Section 10(1A) provides for an annual superannuation allowance to a disabled member of the police force, which relevantly, is defined to include a former member of the police force who resigned or retired and is later certified (by the Trustee) pursuant to s 10B(2) to be incapable, from a specified infirmity of body or mind, of personally exercising the functions of a police officer referred to in s 14(1) of the Police Act 1990 (NSW) at the time of the member's resignation or retirement, that infirmity being determined, pursuant to s 10B(3) by the Commissioner or on appeal, to have been caused by the former member having been hurt on duty when he or she was a member of the police force.
5. Section 12D of the Police Regulation Act is headed, "Gratuities to members hurt on duty in respect of loss of limbs, medical expenses, etc". As indicated, the reference to "STC" is to SAS Trustee Corporation. Section 12D provides: (1) STC may pay to a member of the Police Force who is hurt on duty or to a former member of the Police Force who was hurt on duty when he or she was a member of the Police Force a gratuity of such amount as STC determines, not exceeding the amount that, in the opinion of STC, would have been payable to the member or former member under Divisions 3, 4 and 5 of Part 3 of the Workers Compensation Act 1987 if the member were, or the former member had been, a worker for the purposes of that Act. (2) STC may pay a gratuity to a member of the Police Force under this section notwithstanding that the member is not discharged from the Police Force as a result of being hurt on duty. (3) STC shall not grant a gratuity under this section to a member or former member of the Police Force unless: (a) an annual superannuation allowance is payable to the member or former member under section 10 in respect of an infirmity of body or mind arising out of the same injury to which the claim for the gratuity relates, or (b) where an annual superannuation allowance is not so payable, the injury to which the claim for the gratuity relates is determined, pursuant to subsection (4) or on appeal, to have been caused by the member being hurt on duty or the former member having been hurt on duty when he or she was a member of the Police Force. (4) Where a member or former member of the Police Force claims a gratuity under this section (otherwise than in respect of an injury referred to in subsection (3)(a)), the Commissioner of Police must: (a) decide whether or not the injury to which the claim relates was caused by the member being hurt on duty or the former member having been hurt on duty when he or she was a member of the Police Force, and (b) give written notice of the decision to STC and to the claimant. (5) Despite any other provision of this section or any other provision of this Act, a gratuity or part of a gratuity payable under this section may, with the approval of the Minister, be paid by a person other than STC and from a source other than the Fund.
6. The respondent's right to appeal to the District Court as a person aggrieved by the Trustee's decision is given by s 21 of the Police Regulation Act which provides: 21 Determination by District Court (1) A person who considers himself or herself aggrieved by: (a) a decision made by STC on a matter that arises under this Act by reason of a member of the police force being hurt on duty, or (b) a decision made by the Commissioner of Police under section 10A(1), 10B(3)(a), 12C(1), 12C(2) or 12D(4)(a), may, within the period of 6 months after the person is notified of that decision, apply to the District Court for a determination in relation to that decision. (2) Notification of a decision under subsection (1) is to be given in writing. (3) STC or the Commissioner of Police, as the case may be, is entitled to be represented at the hearing of an application under this section. (4) The District Court, after considering an application under this section, may make a determination that the decision of STC or the Commissioner of Police, as the case may be, in respect of which the application was made: (a) be confirmed, or (b) be set aside and replaced by a different decision made by the District Court. (5) The District Court shall not make a decision referred to in subsection (4)(b) unless STC or the Commissioner of Police, as the case may be, could pursuant to this Act make that decision. (6) Where the District Court makes a decision referred to in subsection (4)(b), that decision shall, for the purposes of this Act, be deemed to be made by STC or the Commissioner of Police, as the case may be, and shall be carried into effect. (7) (Repealed) (8) The District Court, after hearing an application under this section, may assess the costs of the successful party to the application (including costs of representation and witness expenses, if any) and order that the costs so assessed or any part of them be paid to the successful party by any other party within a time specified in the order. (9) The District Court shall not order the payment of costs under subsection (8) by the applicant for a determination under this section unless satisfied that the application was frivolous or vexatious or was made fraudulently or without proper justification. (10) Where costs assessed under subsection (8) are not paid within the time specified in the order made under that subsection in respect of them, the person in whose favour the order was made may recover the costs in a court of competent jurisdiction as a debt due to that person by the person against whom the order was made. (11) In this section: District Court means the District Court of New South Wales established by the District Court Act 1973.
7. The relevant provisions of the Workers Compensation Act 1987 (NSW) (the Workers Compensation Act) are the definition of "injury" in s 4 and ss 59, 60, 61 and 62 respectively.
8. The definition of "injury" in s 4, relevantly, means personal injury arising out of or in the course of employment.
9. Section 59 defines "medical or related treatment" as including, and relevantly, treatment by a medical practitioner, but does not include Ambulance Service, hospital treatment or workplace rehabilitation service.
10. Section 60 of the Workers Compensation Act provides: (1) If, as a result of any injury received by a worker, it is reasonably necessary that: (a) any medical or related treatment (other than domestic assistance) be given, or (b) any hospital treatment be given, or (c) … [not extracted]; (d) … [not extracted].. the worker's employer is liable to pay, in addition to any other compensation under this Act, the cost of that treatment or service and the related travel expenses specified in subsection 2. … (3) Payments under this section are to be made as the costs are incurred, but only if properly verified.
11. The rates that are applicable for such treatments are specified in s 61 in relation to medical or related treatment and s 62 in relation to hospital treatment. It is unnecessary to refer to the detail of these provisions.
12. One further matter should be mentioned. In addition to the powers conferred upon the Trustee under the Police Regulation Act, the appellant has the powers conferred under the Administration Act, as well as powers under the Trustee Act 1925 (NSW), in particular Div 2 of Pt 2, not otherwise inconsistent with the superannuation legislation: s 49, Administration Act. The principal ancillary power conferred under the Administration Act is contained in s 57, which provides: 57 Powers of STC Without limiting any other function conferred or imposed upon it, STC may do all things that are necessary or convenient to be done for, or in connection with, the exercise of STC's functions.

The primary judge's reasons

1. After an extensive review of the medical evidence, and reference to authorities on the meaning of "reasonably necessary" medical treatment, including Rose v Health Commission (NSW) (1986) 2 NSWCCR 32 at [47] (Burke CCJ), the primary judge identified (at [82]) the real question as being the actual or potential effectiveness of the treatment proposed by Dr Diwan. His Honour approached that inquiry on the basis that the words "reasonably necessary" do not require the absolute necessity for the surgery proposed; rather, the adverb "reasonably" modifies the strictness or exactitude of the adjective "necessary". Applying the formulation of Burke CCJ in Bartolo v Western Sydney Area Health Service (1987) 14 NSWCCR 223, his Honour stated that whether it can be said that the respondent should not do without the proposed surgery really boiled down to: will the treatment be effective.
2. On that issue, the primary judge made the following critical finding at [83]: I have reached the view that it may be necessary to provide the operative treatment proposed by Dr Diwan, if it can be established that the major cause of the plaintiff's pain results from neurological damage at the level of the neck; that is, in essence, whether the plaintiff's pains are radicular, that they are caused by nerve root compression caused by bulging or protruding or herniated discs in the cervical spine. However, it appears to me that before that can be ascertained, the plaintiff's ulnar neuropathies should be investigated and perhaps treated to see whether the performance of that treatment ameliorates the plaintiff's symptoms. The problem legally is that there is no suggestion here that the ulnar neuropathies at each elbow and the carpal tunnel syndrome in the right wrist were caused by the injury to the plaintiff's neck on 1 January 1998. Those are not compensable conditions.
3. At [84], the primary judge set out a 7-step process as to how, if he were the respondent, he would proceed. This included obtaining updated neurophysiological studies; consultation with Dr Hugh Jones, an orthopaedic surgeon, as to whether the respondent's symptoms were mainly or largely due to elbow pathology and, if so, whether they could be improved by treatment such as injections into the elbows or perhaps surgery at the elbows; obtaining the advice of Dr Jones and Dr Diwan as to the optimum treatment intended to relieve the respondent's symptoms; and in the event of a disagreement between Dr Jones and Dr Diwan, obtaining an independent "second opinion" from a respected orthopaedic surgeon as to the better or best way to proceed. Step 6 was as follows: [6]. It may well be that if treatment and/or surgery is provided by Dr Jones to the plaintiff's elbows, that the plaintiff's symptoms will be largely relieved and he might decide not to proceed with cervical surgery. However, even if treatment provided by Dr Jones does not relieve the plaintiff's symptoms, then it appears to me that it would be justifiable in the circumstances for the plaintiff to undergo the surgery proposed by Dr Diwan;
4. His Honour noted that the surgery initially proposed by Dr Diwan involved surgery at C6/7 and C5/6 and continued (at [85]): It appears to me that it might be prudent to give Dr Diwan the permission to carry out surgery between C3 and C7 provided that there is some persuasive evidence that the plaintiff's symptoms are alleviated mainly by the condition of his cervical spine. His Honour's reference to "alleviated" should be understood as "caused".
5. At [91], his Honour made the finding in terms of the determination set out in the orders made on 2 November 2015: see [32] above.

Nature and grounds of the Appeal

1. An appeal to this Court from an award of the District Court in its residual jurisdiction is limited to one where a party is aggrieved by an award of the court in point of law: District Court Act 1973 (NSW) (District Court Act), s 142N(1). The term "award" is defined in the District Court Act, s 142M(1) to include an interim award, order, decision, determination, ruling and direction. The reference in s 142N(1) to the "residual jurisdiction" of the District Court means the jurisdiction conferred on the District Court by the operation of the Compensation Court Repeal Act 2002 (NSW): District Court Act, s 142G. This, relevantly, includes jurisdiction to make determinations under s 21 of the Police Regulation Act.
2. The main point of law identified by the Trustee is whether the District Court, standing in the shoes of the Trustee, has power under s 12D of the Police Regulation Act to make a conditional determination (ground 1). The Trustee also asserted that there had been a constructive failure to exercise the jurisdiction conferred on the District Court by s 21 of the Police Regulation Act because his Honour had failed to have any or any proper regard to the unchallenged medical evidence of Dr Ryan and Dr Schwartz, and failed to make a finding on the balance of probabilities that cervical surgery was reasonably necessary to treat Mr Perrin's cervical spondylosis (ground 2).
3. The focus of debate in oral argument was directed to the first ground, it being common ground that if this ground was made out it was unnecessary to consider the second ground.

Submissions - Ground 1

1. The Trustee submitted that the primary judge made a decision beyond the scope of that which the Trustee was capable of making under s 12D of the Police Regulation Act, because his determination on the need for surgery was predicated upon the resolution of an antecedent medical question concerning the cause of symptoms, including the manner of the investigation. It was submitted that the Trustee, and in turn the District Court on appeal, has no power to pay a gratuity on the condition that other alternative pathologies are first excluded as a cause of the respondent's symptoms and disability.
2. The Trustee pointed to the advice from the primary judge regarding the steps that ought to be taken by the respondent before embarking upon the surgery contemplated by Dr Diwan as reinforcing the conclusion that his Honour failed to determine whether the proposed medical treatment was reasonably necessary as a result of the certified injury.
3. The respondent accepted that the whole of the medical evidence clearly established that it was prudent to first exclude the possibility that all, or the bulk of, the symptoms suffered by the respondent could be resolved simply by treatment for ulnar neuropathy, either by injections into the elbows or perhaps surgery to the elbows. Nonetheless, the respondent submitted that it was open to the Trustee and to the District Court to determine whether or not a future medical procedure would be justified, conditional upon some step or steps being first taken that might exclude the necessity for the operation.
4. In support of this approach to the Trustee's powers, the respondent referred to notions of common sense and convenience, arguing that the contingencies and uncertainties surrounding any medical procedure supported the primary judge's conclusion that there existed the requisite power to make conditional determinations.
5. The respondent also referred to the powers of the Trustee under s 57 of the Administration Act (set out at [57] above) and submitted that it was "convenient" that the Trustee make a decision to conditionally pay for an operation where the condition involves the member's treating doctors satisfying themselves, before performing the medical treatment, that it is necessary.

Decision

1. The starting point is to observe that s 21(5) of the Police Regulation Act limits the District Court to substituting decisions of a sort that, relevantly, the Trustee could have made pursuant to the Police Regulation Act. This requires the District Court to stand in the shoes of the Trustee as the decision-maker: Commissioner of Police v Kennedy [2007] NSWCA 328 at [40].
2. Next, it is necessary to direct attention to the terms of the determination made by the primary judge. The reasoning (at [83]) leading to his Honour's conditional finding (at [91]) that the proposed surgery recommended by Dr Diwan is reasonably necessary has been set out at [61] above. Two observations can be made.
3. First, the primary judge did not find that, as a result of the certified "hurt on duty" injury received by the respondent, it is "reasonably necessary" that the proposed medical treatment be given to the respondent. This is clear from the opening sentence of [83] where his Honour states that "it may be necessary to provide the operative treatment proposed by Dr Diwan, if it can be established that the major cause of the [respondent's] pain results from neurological damage at the level of the neck" [emphasis added].
4. Secondly, the actual finding by his Honour in [83] was that his Honour could not be satisfied that the operative treatment proposed by Dr Diwan is reasonably necessary while the respondent's ulnar neuropathies needed to be investigated, and perhaps treated. Only then could the primary judge determine whether undertaking that treatment would relieve the respondent's symptoms. His honour's actual finding reflected the evidence given by Dr Diwan in cross-examination.
5. Dr Diwan agreed that, before proceeding with the proposed surgery, he would prefer the respondent to have his neuropathy treated, and outlined the protocol he would follow, which included further investigations by Dr Schwartz, including, possibly, further neurophysiological studies; a further MRI scan; and a case conference with Dr Jones for the purpose of deciding what was the appropriate treatment for the respondent's ulnar neuropathies at each elbow.
6. It can be accepted that the Trustee's powers include doing all things necessary or convenient in the exercise of its power, among others, to pay gratuities: Administration Act, s 57. However, the existence of that power does not assist the respondent's argument seeking to uphold his Honour's decision. The potential for the exercise by the trustee of the incidental power conferred by s 57 of the Administration Act does not exist if the primary power to pay gratuities under s 12D of the Police Regulation Act is unavailable. In the circumstances of the present case, one of the conditions for the exercise of the primary power to pay gratuities being the "reasonably necessary" criterion in s 60 of the Workers Compensation Act was not satisfied. Until the respondent's non-compensable conditions (relating to his ulnar neuropathies) were investigated, and possibly treated, and the outcome of any treatment was known, his Honour could not be satisfied that the proposed surgery was reasonably necessary to alleviate the condition of the respondent's cervical spine. Accordingly, the appeal from the Trustee's decisions refusing to pay a gratuity should have been dismissed.

Extension of time for appeal

1. The Trustee filed a notice of intention to appeal on 24 November 2015 in respect of the decision made by the primary judge on 2 November 2015. The time for filing any notice of appeal expired on 2 February 2016: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 51.9(1)(a). The notice of appeal filed on 7 March 2016 was a little over one month out of time. The Trustee sought an extension of time by a notice of motion filed on 8 March 2016 on the ground of the delay in obtaining a copy of his Honour's oral reasons which were delivered over two days on 31 October and 2 November 2015. The respondent, most properly, did not object to the extension sought by the Trustee. It is appropriate that the extension be granted.

Conclusion and Orders

1. The time for filing of the notice of appeal should be extended and the appeal should be allowed. The "finding" or determination made by the primary judge and the orders relating to costs and liberty to apply should be set aside.
2. As to costs in this Court, there is no reason why costs should not follow the event: UCPR r 42.1. As to costs in the District Court, the Trustee, very fairly, did not contend that the respondent's application to that court was frivolous or vexatious or was without proper justification: Police Regulation Act, s 21(9). Accordingly, there should be no order as to costs in the District Court.
3. I propose the following orders: 1. Extend the time for filing of the notice of appeal to 7 March 2016. 2. Appeal allowed. 3. Set aside the determination and orders made by Neilson DCJ on 2 November 2015 and in place thereof: 1. Dismiss the appeal to the District Court; 2. Make no order as to costs of the proceedings in the District Court. 1. Respondent to pay the appellant's costs of the appeal in this Court. 2. Respondent to have a certificate under the Suitors' Fund Act 1951 (NSW).
4. SACKVILLE AJA: I agree with the orders proposed by Gleeson JA and with his Honour's reasons. I add the following observations.
5. Section 12D(1) of the Police Regulation (Superannuation) Act 1906 (Police Regulation Act) provides that the appellant (STC) may pay to a member of the police force who is hurt on duty a gratuity of such amount as STC determines, not exceeding the amount that, in the opinion of STC, would have been payable to the member under Part 3 of the Workers Compensation Act 1987 (NSW) (Workers Compensation Act), if the member had been a "worker" for the purposes of that Act. In this case, the respondent sought a gratuity to cover the cost of surgery on his cervical spine (proposed spinal surgery).
6. Mr Birch SC, who appeared for the respondent, did not dispute that s 12D(1) of the Police Regulation Act requires a claimant to satisfy s 60(1) of the Workers Compensation Act. Thus the respondent had to show that as a result of the injury he received on duty the proposed spinal surgery was "reasonably necessary".
7. The fundamental difficulty with the determination of the District Court is that the findings made by the primary Judge are to the effect that the proposed spinal surgery is not yet reasonably necessary. [13] The findings make it clear that a determination that the proposed spinal surgery is reasonably necessary cannot be made until a separate, non-compensable surgical procedure (the elbow operation) is carried out. If the elbow operation relieves the symptoms experienced by the respondent, which on the evidence is quite possible, there would be no need for the proposed spinal surgery to take place.
8. Contrary to Mr Birch's submissions, this does not mean that STC can never grant a gratuity to a claimant in advance of a surgical or other medical procedure taking place where it is unclear whether the procedure will actually have to be performed. For example, if it is uncertain whether a particular operation is required unless and until exploratory surgery is performed, STC may nonetheless form the view that the procedure is reasonably necessary. STC could take into account (if it be the fact) that the procedure, if required, will have to be performed at the same time as, or very shortly after, the exploratory surgery.
9. Section 12D of the Police Regulation Act distinguishes between the payment of a gratuity (s 12D(1)) and the "grant of a gratuity" (s 12D(3)). This distinction indicates that STC has power to grant a gratuity to enable a procedure to be carried out, even if it is not certain that the procedure will ultimately be required or that a payment will have to be made. Thus surgery may be regarded as reasonably necessary by reason of a work-related injury, notwithstanding that there is a chance that more limited intervention will resolve the problem, or that surgery will prove to be impracticable.
10. The present case is different. The respondent not only has to undergo a discrete surgical procedure (the elbow operation) before any decision can be made as to whether the proposed spinal surgery is required. The elbow operation may well relieve symptoms that are unrelated to any injury the respondent received while on duty and, if the operation does so, the result may render the proposed spinal surgery unnecessary. As the primary Judge found, it is simply too soon to ascertain whether, as a result of an injury received while on duty, it is reasonably necessary for the proposed spinal surgery to take place.
11. The District Court, in discharging the functions conferred on it by s 21 of the Police Regulation Act, could have adjourned the case until the outcome of the elbow surgery was known. There was no dispute that the District Court, in exercising its powers under s 21(1) of the Police Regulation Act, could take into account developments after STC's decision, such as the availability of additional diagnostic information as a consequence of the elbow surgery. However, in view of the findings made by the primary Judge, I do not think it was open to his Honour to make a determination that the proposed spinal surgery was reasonably necessary as the result of the injury the respondent received on duty.

Endnotes

1. Perrin v SAS Trustee Corporation (No 2) [2015] NSWDC 345 (Nielson DCJ).
2. Police Regulation Act, s 12D(3)(a), (4)(a).
3. Judgment at [59].
4. Judgment at [64].
5. Tcpt, 31/07/15, pp 69-70.
6. Tcpt, p 70(20).
7. Judgment at [83].
8. Judgment at 84.
9. Judgment at [85].
10. Police Regulation Act, s 21(1)(a).
11. See finding in last two sentences of passage set out at [16] above.
12. Police Regulation Act, s 21(9).
13. Perrin v SAS Trustee Corporation (No.2) [2015] NSWDC 345 at [83]. 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: 02 September 2016