State Super SAS Trustee Corporation v Cornes

Court of Appeal (NSW)|2013-02-26|Before: McColl JA, Basten JA, Preston CJ, Coll JA

imes [2012] NZCA 459 SZRUI v Minister for Immigration, Multicultural Affairs and Citizenship [2013] FCAFC 80 Category: Principal judgment Parties: State Super SAS Trustee Corporation (Appellant) John Cornes (Respondent) Representation: Counsel:

M Joseph SC/D Stanton (Appellant) I D Roberts SC/T Edwards (Respondent) Solicitors:

SMK Lawyers (Appellant) Harris Wheeler (Respondent) File Number(s): CA 2011/249876 Decision under appeal Jurisdiction: 9101 Date of Decision: 2011-06-30 00:00:00 Before: O'Toole DCJ File Number(s): DC RJ 77 of 2010

Judgment 1McCOLL JA: I agree with Basten JA's reasons and the orders his Honour proposes. 2BASTEN JA: This is another appeal concerned with the bifurcated functions established by the Police Regulation (Superannuation) Act 1906 (NSW) ("the Police Superannuation Act") in relation to entitlements of members of the police force who are hurt on duty to payments in the nature of workers' compensation. Those functions are divided between the present appellant, State Super SAS Trustee Corporation, referred to in the Police Superannuation Act as the "STC", and the Police Commissioner.

Statutory background 3Section 10 of the Police Superannuation Act provides for the payment of an "annual superannuation allowance" to a disabled member of the police force being, relevantly, an officer who is "discharged after being certified, pursuant to section 10B(1), to be incapable, from a specified infirmity of body or mind, of personally exercising the functions of a police officer": s 10(1), disabled member of the police force, (a). The infirmity must be determined, pursuant to s 10B(3), to have been caused by the member being "hurt on duty". The certificate (or certification) provided under s 10B(1), is undertaken by the STC; the certification under s 10B(3) is undertaken by the Commissioner of Police. 4Other benefits are payable in addition to the annual superannuation allowance. In particular, the STC may pay a "gratuity" in an amount not exceeding that which would have been payable if the officer had been a "worker" for the purposes of the Workers Compensation Act 1987 (NSW), pursuant to Division 3, 4 or 5 of Part 3 of that Act: Police Superannuation Act, s 12D. Division 4, which is of present significance, provided for lump sum payments for non-economic loss: Workers Compensation Act, ss 66 and 67. A gratuity may be payable in circumstances where an annual superannuation allowance is payable and in circumstances where it is not. In the latter case, the injury must be certified by the Commissioner of Police, as under s 10B. Otherwise, a gratuity may be granted where an annual superannuation allowance is payable "in respect of an infirmity of body or mind arising out of the same injury to which the claim for the gratuity relates": s 12D(3)(a). The intended purpose of this scheme is to ensure that gratuities, like superannuation allowances, are only payable in respect of infirmities which have been certified as being caused by the member being hurt on duty. Accordingly, the STC, in awarding an amount under s 12D, must act on the terms of a certificate given by the Commissioner of Police. 5There is a further complication. Payment may only be sought for a psychological infirmity, in respect of injury received on or after 1 January 2002, being the commencement of relevant amendments to the Workers Compensation Act. If that condition is satisfied, the payment may nevertheless need to be reduced to the extent that the resulting impairment was due to events which occurred prior to that date: Workers Compensation Act, Sch 6, Pt 18C, cl 3.

Procedural background 6The STC refused to grant the respondent, a former police officer, a payment under s 12D of the Police Superannuation Act. The respondent applied for a determination of his claim by the District Court, pursuant to s 21 of the Police Superannuation Act, which allows for a fresh hearing of the issues. He was successful in the District Court, obtaining an order that the STC pay lump sum compensation in the sum of $32,500 for his 22% permanent whole person impairment. The STC appealed to this Court from that judgment. 7The statutory right of appeal invoked by the STC is available to a party aggrieved by "an award of the Court in point of law": District Court Act 1973 (NSW), s 142N(1). The term "award" is defined to include an order, decision or determination: s 142M(1). 8The decision of the trial judge, O'Toole DCJ, was delivered on 30 June 2011. The first notice of appeal, filed on 9 September 2011 identified four grounds, in the following terms: a. Failed to give any or any proper regard to the terms of "hurt on duty" certificate issued by the Commissioner of Police pursuant to section 10(3)(a) of the Police Regulation (Superannuation) Act, 1906; b. Failed to limit her inquiry to the statutory requirements of section 12D injury certified as "hurt on duty" pursuant to section 10(3)(a) of the Police Regulation (Superannuation) Act, 1906; c. In determining the entitlement to a gratuity pursuant to section 12D of the Police Regulation (Superannuation) Act, 1906, failed to apply the provisions of Schedule 6 Part 18C Clause 3 of the Workers Compensation Act 1987; d. Failed to have any or any proper regard to events that occurred befor [sic] 1 January 2002 as described in Schedule 6 Part 18C Clause 3 of the Workers Compensation Act 1987. 9On 9 February 2012 the STC filed an amended notice of appeal which reformulated these grounds in ways which are not presently material, and also added a further ground (e) and a further paragraph to the notice, in the following terms: (e) Failed to afford the Appellant procedural fairness in that: (i) Her Honour failed to provide any or any adequate reasons for the finding of the extent of the gratuity payable [J100, 167]. (ii) Her Honour failed to provide any or any adequate reasons for the finding that no proportion of the permanent impairment was due to "something" that occurred before 1 January 2002 [J 161]. (iii) Her Honour failed to provide any or any adequate reasons for finding that no proportion of the permanent impairment was due to any previous injury, pre-existing condition or abnormality [J 166]. (iv) Her Honour failed to notify the parties of the use to be made by her of her observations of the Respondent in the witness box [J 44 and 48] and used medical testimony in an unexpected and unreliable manner. (v) Her Honour failed to provide any or any adequate reasons as to how, while accepting Dr Diamond's assessment of permanent impairment, none of it was due to other traumatic events occurring before February 2002 and after August 2003 as Dr Diamond and/or all other medical practitioners opined. 2 The Appellant will seek leave to reargue the ratio of Azzopardi v Tasman UEB Industries (1985) 4 NSWLR 139 to hold that a "perverse finding of fact" or "illogical finding of fact" raise 'points of law' and that Her Honour's findings at [100] [161] [163] [166] were perverse and illogical. 10At the hearing of the appeal, the STC sought to add a further ground, identified as "ground 6", which, in effect, sought to recharacterise the primary complaints already made as constructive failures to exercise the jurisdiction of the court. As senior counsel for the STC accepted in the course of the hearing, the intention was to capture the proper formulation of the errors as errors in point of law, in accordance with the reasoning of the Court in Goodwin v Commissioner of Police [2012] NSWCA 379 at [18]-[25]. To the extent that it was merely a re-characterization of the existing grounds, the respondent did not object to the amendment. 11Goodwin considered whether the rejection by the trial judge of a recusal application, based on a reasonable apprehension of bias, could give rise to a grievance with respect to a decision "in point of law". However, the Court also identified the possibility that a mistake in understanding the facts, applying the law and reasoning to a conclusion could amount to a constructive failure to exercise jurisdiction if it revealed "a basic misunderstanding of the case brought by an applicant, [so that] the resulting flaw is so serious as to undermine the lawfulness of the decision in question in a fundamental way": Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; 77 ALJR 1088 at [88] (Kirby J), referred to in Goodwin at [20]. The reasoning also accepted the proposition that a failure by a tribunal to bring its own mind to bear on the issues before it was a constructive failure to exercise its jurisdiction: LVR (WA) Pty Ltd v Administrative Appeals Tribunal [2012] FCAFC 90; 203 FCR 166 (North, Logan and Robertson JJ) at [5], reasoning adopted in Secretary for Justice v Simes [2012] NZCA 459 (Randerson J, writing for himself, Stevens and French JJ) at [58]-[59], and SZRUI v Minister for Immigration, Multicultural Affairs and Citizenship [2013] FCAFC 80, in relation to an administrative tribunal, particularly at [2]-[5] (Allsop CJ). 12Broad statements in Azzopardi v Tasman UEB Industries Pty Ltd (1985) 4 NSWLR 139 to the effect that a finding of fact which could be characterised as "perverse" or "illogical" does not raise a point of law should be understood as qualified in this way. It is not in doubt that merely to identify a finding of fact as in someway erroneous does not raise a question of law. However, if the finding has resulted from an error of the kind identified above, it may reveal a constructive failure to exercise jurisdiction and thus an error of law. The fact that the finding could also be fairly characterised as "perverse", or the process of reasoning by which it was reached "illogical", does not diminish the legal error so identified. The language of perversity or illogicality is neither sufficient nor necessarily inadequate to identify a point of law: some greater level of precision may be necessary.

Underlying legal principles 13However formulated, there were two points of law in respect of which the STC complained that the trial judge had erred. The first was in failing to apportion the causes of the certified impairment as between those arising before and after 1 January 2002, the proportion potentially the subject of a payment being limited to that caused by events after the commencement date of the amendments permitting claims for psychological injury. Secondly, the STC contended that any contribution to the impairment which arose after the notional date of injury had not been certified by the Commissioner as resulting from the respondent being "hurt on duty" and, accordingly, was also to be ignored in calculating the degree of permanent impairment. 14The first challenge requires reference to the terms of the certificate. As already noted, the certificate as to the infirmity is given by the Commissioner of Police pursuant to s 10B(3) of the Police Superannuation Act. The certificate stated, relevantly for present purposes: "In terms of Section 10B(3)(a) of the Police Regulation Superannuation Act, 1906, (as amended), I have decided that the suffering by Chief Inspector Cornes of the infirmity of post traumatic stress disorder; panic attacks; and major depression, as specified in the certificate of the Police Superannuation Advisory Committee, dated 14 December 2006, was caused by the member being hurt on duty. Notional date of injury: 6 August 2003." 15The certificate was dated 10 April 2007. The certificate of the Police Superannuation Advisory Committee, referred in the s 10B(3) certificate, was not in evidence, but the statement of the nature of the infirmity was not in dispute. What was in dispute was the significance of the reference to a "notional" date of injury and the need to assign causal elements to a period prior to 1 January 2002. The Workers Compensation Act expressly deals with an injury which "is a disease which is of such a nature as to be contracted by a gradual process" (s 15) and one which consists in "the aggravation, acceleration, exacerbation or deterioration of a disease" (s 16). In each case, the section provides that the injury is "deemed to have happened" either at the time of the worker's death or incapacity or, if neither has yet resulted, at the time the worker makes a claim for compensation with respect to the injury: ss 15(1) and 16(1). 16That statutory background appears to explain the allocation of a "notional" date of injury in the Commissioner's certificate. Section 10B(3) of the Police Superannuation Act requires that the Commissioner decide whether the infirmity was caused by the officer being hurt on duty and also the "date or dates on which the member ... was hurt on duty". The date on the certificate, namely 6 August 2003, was the date on which the respondent completed a claim form alleging that he was "hurt on duty". The respondent was later medically discharged from the police force: the last day on which he attended duties as a police officer was 15 May 2006. 17In these circumstances the reference to a "notional" date of injury, being the date of claim for hurt on duty benefits, prior to the time at which he became incapacitated, may have been an intended application of s 15(1) or s 16(1) of the Workers Compensation Act. A similar issue arose in SAS Trustee Corporation v Pearce [2009] NSWCA 302. The majority view in that case was that the specified date, also qualified as "notional", was a date of deemed injury under s 15 or s 16. Giles JA was not satisfied that the certificate in fact adopted the approach identified in either of those sections, because the date in the certificate in that case did not correlate with any of the relevant dates for the purposes of those provisions. That problem does not arise in the present case. 18The first limb of the appellant's case turned on the effect of the transitional provisions. The transitional provisions were introduced into the Workers Compensation Act with amendments incorporating a right to compensation for psychological injury: Workers Compensation Legislation Amendment Act 2001 (NSW). They are now to found in Schedule 6, Pt 18C of the Workers Compensation Act. 19As the Court explained in Pearce at [6], lump sum compensation became payable for psychological injury pursuant to ss 66 and 67 of the Workers Compensation Act, provided that the psychological injury was not secondary to physical injury and that the degree of permanent impairment was at least 15%: s 65A. These amendments were described in the transitional provisions as the "lump sum compensation amendments": Pt 18C, cl 1. The amendments did not apply "in respect of an injury received before the commencement of the amendments": cl 3(1). That subclause was not relied upon in the present case. Rather, reliance was placed upon the following provisions: 3 Lump sum compensation amendments ... (2) There is to be a reduction in the compensation payable under Division 4 of Part 3 (as amended by the lump sum compensation amendments) for any proportion of the permanent impairment concerned that is a previously non-compensable impairment. ... (3) A previously non-compensable impairment is loss or impairment that is due to something that occurred before the commencement of the amendments..., being loss or impairment that is of a kind for which no compensation was payable under that Division before that commencement. 20There are two matters arising from the language of clause 3(3). First, the reference to "something that occurred" is to be understood as referring to an exogenous event, namely something happening outside the individual, and not referring to an innate condition or susceptibility. 21Secondly, there is a mismatch between the language of the Workers Compensation Act and the language of the Police Superannuation Act. The latter refers to an "infirmity" whereas the former refers to a "loss or impairment" and a proportion of the "permanent impairment". However, the provisions must work together as, in order to determine whether any amount is payable under the Police Superannuation Act, the STC must determine the degree of permanent impairment resulting from the psychological injury and find whether it is "at least 15%", for the purposes of s 65A of the Workers Compensation Act. The term "infirmity of body or mind" is used in s 10 of the Police Superannuation Act to refer to the cause of the incapacity for work: it should be treated, in functional terms, as equivalent to "impairment", as used in the Workers Compensation Act. 22There may also be a question as to whether there is a distinction to be drawn for present purposes between the terms "injury" and "infirmity", as s 12D(3) refers to an infirmity "arising out of" an injury. In the case of a psychological injury, and for the purposes of the transitional provisions, it is doubtful whether there is a relevant distinction. Thus, in the present case, the "infirmity" was defined as "post traumatic stress disorder; panic attacks and major depression": these could, depending on the context, readily be identified as forms of injury, infirmity or impairment. (The distinction is clearer with respect to a physical injury, such as a broken bone, which may leave the body weakened, and thus impaired, after the injury itself has healed.) 23For the purposes of the transitional provisions, the significant point of distinction is between "something" (such as an event), which occurred at a particular time and to which the impairment or infirmity is wholly or partly due, and the impairment or infirmity itself. 24The assumption underlying the transitional provisions is that a specific impairment can be apportioned as between causal events. Thus, where no impairment arose until after the commencement of the 2002 amendments, the STC argued that apportionment is required by reference to any event or events which weakened the person's psychological defences or increased susceptibility to future injury. A similar assessment of the impairment must be made where a proportion of an impairment is due to a "previous injury" or "pre-existing condition or abnormality": see Workplace Injury Management and Workers Compensation Act 1998 (NSW) ("Workplace Injury Act"), s 323. In Pearce it was held that s 323 did not apply with respect to the circumstances in that case. At least if the injuries were each a disease contracted by a gradual process, as the STC contended, s 323 would have no application in the present case; neither party suggested otherwise. The difference between the exercises required by each provision is that s 323 is posited on the existence of a pre-existing condition or impairment, whereas cl 3 of the transitional provisions is not. 25The second limb of the STC's case related to events which occurred after the notional date of injury, namely 6 August 2003. The ascription of a notional date of injury, in the context of a disease contracted by a gradual process, raises a question as to the relevant causal elements of the infirmity. It appears to have been assumed by the STC that the Commissioner had certified that the infirmities were caused by the respondent being hurt on duty only by reference to events which occurred before the specified date. On that assumption, subsequent events, even if they pre-dated the certificate, were not included in the certification. The respondent's solicitors, in their letter of 23 July 2007 seeking a payment under s 12D, assumed otherwise. However, the proper construction of the certificate appears not to have been debated in the District Court. In order to determine the scope of the certificate it might have been appropriate to consider the material before the Commissioner's delegate and the terms of the application (if any) for the s 10B(3) certificate. It does not appear that that material was before the District Court. 26Although, as will appear below, there was medical evidence ascribing the respondent's condition in part to events which post-dated 6 August 2003, and although the events appear to have arisen in the course of his employment as a police officer, a finding that any aggravation of his condition was caused by him being hurt on duty was a function which could only be exercised by the Commissioner. Whether the certificate covered such events was therefore a question of some importance which needed to be resolved by the District Court. It does not appear to have been. 27The nature and purpose of the certificate derive from the statutory scheme. Pursuant to s 12D(3)(a), a payment could not be made unless, in the case where an annual superannuation allowance was payable, that allowance was payable "in respect of an infirmity of body or mind arising out of the same injury" to which the claim related. For this purpose, infirmity and injury were to be distinguished. However, pursuant to the certification requirement under s 10B(3)(a), the Commissioner certified the "infirmity" as being caused by the member being "hurt on duty". That section did not in terms refer to the injury out of which the infirmity was said to arise. However, the phrase "hurt on duty" is defined to mean "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": Police Superannuation Act, s 1(2), hurt on duty. That in turn refers to the definition of "injury" in the Workers Compensation Act which, at the relevant time, included "a disease which is contracted by a worker in the course of employment and to which the employment was a contributing factor": Workers Compensation Act, s 4, injury, (b)(i). The term "injury" was also defined to include "the aggravation, ... exacerbation or deterioration of any disease, where the employment was a contributing factor to the aggravation, ... exacerbation or deterioration". (These definitions were amended on 27 June 2012.) 28The approach taken in this case, which appears to have been common to both parties, was that any significant deterioration in the condition of the respondent, which aggravated his psychological injuries and increased the level of his impairment, to be compensable, would need to be certified by the Commissioner as an injury to which his employment was a contributing factor. On that approach, which appears to accord with the scheme of the Police Superannuation Act and its bifurcated functions for the Commissioner and the STC, any significant increase of his impairment as a result of events which had not been certified as involving the respondent being hurt on duty, should be discounted in calculating the degree of his compensable impairment. As the date of injury was identified as 6 August 2003, the STC contended that any level of impairment or infirmity which arose thereafter could not be said to have arisen out of the "same injury" as that which had been certified for the purposes of the superannuation allowance. Accordingly such post-August 2003 increase in the respondent's level of impairment was not compensable.

Reasoning of trial judge 29It is convenient to start by identifying the relevant conclusions (findings) of the trial judge in respect of critical issues. First, in construing the Commissioner's certificate, she concluded that the Commissioner had identified the disease as one contracted by a gradual process, as described in s 15 of the Workers Compensation Act or, in the alternative, an aggravation, acceleration, exacerbation or deterioration of a disease, as described in s 16 of the Workers Compensation Act: at [158]. In so finding, the trial judge equated the term "injury" in those provisions with the "infirmity" identified in the certificate. As noted above, for the purposes of the transitional provisions there may be a difference between a finding that the injury is a disease contracted by a gradual process, and a finding that the injury consists in the aggravation etc of a pre-existing disease. However, the primary position of the STC at trial (and on appeal) was that the psychological disorders were the result of a gradual process, within the meaning of s 15: Judgment at [35] and submissions, Tcpt 25/03/11, p 3(25)-(45). That approach, which is favourable to the respondent, was also adopted by him as long ago as August 2007, in a letter from his solicitors to the STC in relation to his s 12D claim. The alternative may be disregarded. 30Secondly, the trial judge concluded that, by identifying a "notional" date of injury, the Commissioner found that the injury was "received" on that date, which would entitle the respondent to the benefit of the lump sum compensation amendments, which do not apply with respect to an injury "received" before their commencement under Pt 18C, cl 3(1). That conclusion is not challenged. 31Thirdly, the trial judge considered explicitly whether any proportion of the respondent's permanent impairment was due to something that occurred before 1 January 2002: at [161]. She accepted that, between January 1972 and February 2002, the respondent had performed "dangerous and stressful" operational, administrative and managerial duties, but concluded that their effects were transient and had not been disabling. It will be necessary to return to these findings: it is entirely possible that something which occurred was not disabling at the time, but was causally connected with a disability which became manifest at a later point in time. Thus, it will be necessary to consider whether the trial judge dealt adequately with the possibility that stressful events prior to 2002 contributed to the onset of PTSD, panic attacks and major depression thereafter. 32Fourthly, the trial judge referred to a particular incident in February 2002 when the respondent discovered the body of Detective Chief Inspector Ken Henderson in a police station locker room. Mr Henderson, with whom the respondent had a close and long-standing work relationship, had committed suicide by shooting himself. It was at that stage that the respondent was said to have developed various disabling symptoms of his infirmity, including chronic anxiety and depression and recurrent suicidal ideation and, for the first time, experienced "flash backs" to traumatic operational duties: at [164]. 33Fifthly, the trial judge referred to events which had occurred after August 2003, and in particular in 2005, but concluded that the infirmity from which the respondent was certified as suffering in August 2006 was not due in any proportion to events after 6 August 2003: at [166].

Experience during service in police force 34It is convenient to consider next the circumstances potentially relevant to the psychological conditions certified by the Commissioner. Relevantly for present purposes, these are to be considered by reference to three periods, being: (a) the period from the time the respondent commenced police duties in 1972 until the commencement of the provisions under which workers compensation was available for psychological injury, namely 1 January 2002; (b) the period from 1 January 2002 until the certified date of injury, namely 6 August 2003, and (c) the period from 6 August 2003 until May 2006, when the respondent ceased operational duties.

(a) the first period 35The trial judge dealt with traumatic events in the first period. She noted that between 1972 and 1986 the respondent had "performed operational police duties, participated in dangerous Highway Patrols, investigated suicides and fatal accidents and confronted violent offenders": at [102]. From 1997, the respondent was a relieving duty officer in Newcastle. The trial judge found that, in that role, he had "attended fatal accidents and sieges, investigated suicides, murders and the sudden unexplained death of an infant, notified deceased persons' next of kin and confronted violent criminals": at [109]. 36The trial judge also referred to an incident to which significant importance was attached by the appellant, based upon statements made by the respondent to a solicitor and to medical practitioners. The incident occurred in January 2000 and involved a fellow commissioned officer whom the respondent had described in a statement as "a very close work colleague whom I had excellent rapport with". The trial judge stated at [110]: "Mr Cornes and [the colleague] were friends when they applied for a single position as permanent Duty Officer, with the rank of Chief Inspector of Police, in the Lake Macquarie Local Area Command. Mr Cornes knew the unsuccessful applicant was to be transferred from Newcastle to Lismore." 37Each applicant was to be interviewed for the position. The respondent was interviewed in the week commencing 9 January 2000. On 18 January 2000, prior to his colleague's interview, he saw "a copy of the questions, which he had answered at his own promotional interview" on his colleague's desk. He confronted his colleague with what he described as an "obvious leak", but was not told the source of the "leak": at [111] He reported the incident, treated as a form of internal corruption, to superior officers. In a written statement he said that having to report the colleague, "who was a good mate, for cheating weighed very heavily on my mind and I have suffered a great deal of psychological and physical distress since this incident". He noted that he had also been subject to harassment and intimidation within the police force and had become socially isolated for breach of the protective culture in which he had been brought up; he said he was disappointed with the lack of support he had obtained from superiors, other, perhaps, than Chief Inspector Henderson. 38The trial judge noted that Detective Chief Inspector Henderson became the Lake Macquarie Local Area Commander in April 2000 and transferred the colleague from Newcastle to Belmont Police Station, which was within the same command: at [115]. In February 2001 the respondent attended the Warners Bay Medical Centre and was seen by a Dr Victor Dechnicz, from whom a report was obtained in November 2003 (to which reference will be made below): at [116]. At the very end of the first period, in late 2001 or early 2002, the colleague was retired from the police force, and changes were made in the promotion system, described by the trial judge as "vindicating" the respondent's complaint: at [117]. 39Whether such an incident could and did contribute to the later onset of his PTSD was an issued raised in the medical evidence, discussed below.

(b) the second period 40The critical event in the second period was the suicide of Chief Inspector Henderson. The trial judge referred to this matter in the following passage: "118. In February 2002, Mr Ken Henderson suicided in Charlestown Police Station's locker room by shooting himself. Mr Cornes attended the locker room in the course of his duties and identified Mr Henderson's body. Mr Henderson's seemingly motiveless death preoccupied and distressed Mr Cornes. Consequently, Mr Cornes avoided the locker room. Over the ensuing months, 'it all became too much' for Mr Cornes with the onset of physical symptoms of his 'anxiety and emotion'. He 'felt low', became nauseous going to work and was 'a bit teary'. Intermittently, he visualised his own suicide but he continued his normal work as relieving Duty Officer in the Lake Macquarie Local Area Command .... 119. 'Over the ... two years' between February 2002, and February 2004, Dr Victor Dechnicz systematically excluded a cardiac condition as a cause of Mr Cornes' chest tightness and nervous itch. Dr Dechnicz diagnosed Mr Cornes' complaints as symptoms of 'various stress-related or psychosomatic illnesses'. Mr Cornes persevered with his normal work as relieving Duty Officer in the Lake Macquarie Local Area Command .... 120. In the second half of 2002, the Commissioner of Police appointed Mr Cornes as permanent Duty Officer, with the rank of Chief Inspector, in the Lake Macquarie Local Area Command ... 121. ... Mr Cornes continued his operational duties, investigating fatal accidents. His 'flashbacks' to those fatalities were 'associated with transient feelings of lowness'. His periodic depression increased in frequency and in intensity. He felt 'life was not worth living'...."

(c) the third period 41In her conclusions, the trial judge found at [165]: "Since August 2003, Mr Cornes' incapacitating symptoms of his post traumatic stress disorder; panic attacks; and major depression have fluctuated. His phobic reaction to enclosed spaces, acute episodic anxiety, irrational fears, recurrent panic attacks, depression, suicidal ideation and avoidance behaviour have waxed and waned with his operational duties and concern about his future, outside New South Wales Police Service, ...." 42In addition, there were subsequent traumatic incidents. The trial judge noted at [136]: "Between September and December 2005, Mr Cornes was involved in three traumatic incidents in the course of his operational duties. He attended the horrific sites of a motor bike rider's and of a bicycle rider's fatal accidents on the F3 Motorway. Mr Cornes was nauseated, shovelling the decapitated motor bike rider's remains into a body bag. Mr Cornes' informing the decapitated bicycle rider's widow and young children of that death 'was harrowing'. Without the support of police officers, Mr Cornes searched for an armed male criminal. The criminal shot himself to avoid capture. The criminal's mother threatened Mr Cornes with 'An eye for an eye'. For the ensuing five months, Mr Cornes had nightmares and 'flashbacks' of those events and of fatalities, earlier in his career. He dreamed that his family was endangered and was hostage. ...."

Medical evidence 43The key questions of causation turned on the medical evidence. In stating her conclusions, the trial judge noted that the Police Superannuation Advisory Committee, which, under delegation, certified that the respondent was incapable of personally exercising the functions of a police officer, accepted the diagnoses of Dr Lambeth. This was not in dispute. The trial judge accepted Dr Diamond's assessment of the degree of the respondent's permanent impairment at 22%. However, she had earlier considered in some detail the opinions of the various medical practitioners called in the case. 44The respondent's general practitioner, Dr Dechnicz, prepared a report ostensibly dated 26 November 2003. He noted that the respondent had attended his surgery at the Warners Bay Medical Centre "for stress-related conditions on 5/2/01, 15/2/01, 4/2/02, 10/7/03 and 20/2/04". (Despite the date on the report, which had a 'received stamp' of 3 March 2004, it seems likely that it was in fact completed in late February or early March 2004.) He described the respondent as suffering from "an adjustment disorder and burnout, as identified by Roger Peters (psychologist ...)." He ascribed this condition to "stress and anxiety that appears to be attributed to events that occurred in the police force in January 2000". Those events involved the reporting of the colleague for internal corruption. Dr Dechnicz further stated that "[o]ver the last two years" he had seen the respondent for various "stress-related or psychosomatic illnesses" attributed to anxiety. Dr Dechnicz had apparently not been told of the suicide of Mr Henderson, or did not report it if he had been told. He was not called to give oral evidence. 45Dr Dechnicz referred the respondent in 2003 to a consultant psychologist, Mr Peters, who provided counselling. Mr Peters stated: "As to the cause, I think given [the respondent's] history, which is briefly reported above, the idea of 'wear and tear' is an important contributing factor. I have asked him to write a 'narrative' which he should have forwarded to you, and as you can see, there are a number of difficult periods which could be said to have undermined his coping resources over time. Least of not [?] is the fact that three officers who he was close to committed suicide or died through work related stress. Indeed, I can not under-estimate the significant [sic] and importance of Ken Henderson's death ...." 46Other professionals saw the respondent only some years later. Dr Vickery, a consultant psychiatrist, saw him on 13 December 2007. His recorded history commenced with the report of his colleague for corruption in 2000. He noted a "loss of motivation and a loss of interest in 2001", followed by counselling. He noted that the respondent had seen his general practitioner in 2003 "for his depressed moods" and had been referred to Mr Peters. He further noted: "Mr Cornes reported that in 2004 he had been called to an accident of a motor cyclist who had been decapitated and that he had placed his body parts in a bag. There was another accident in which a cyclist had been killed and an incident in which he was apprehending an armed offender who accidentally shot himself in the head. There was also a SIDS death which he found distressing." 47It was accepted that these events occurred in 2005: nothing turned on who was responsible for the erroneous date in the report. Dr Vickery diagnosed a major depressive disorder and panic disorder with agoraphobia. Because the respondent suffered from another axis 1 disorder, he did not consider that the respondent was properly diagnosed as suffering from PTSD. In answer to a question as to the proportion of loss or impairment due to any previous injury or pre-existing condition, he stated that "[t]here was no reported pre-existing condition prior to 2001". He also gave the following answer: "5. What proportion of loss or impairment is attributable to employment prior to 1/1/2002 and after 1/1/2002: There was no objective evidence of permanent loss or impairment prior to 1 January 2002 even though there were symptoms of depression." 48Dr Vickery expressed the view that "there would have to be an apportionment if there was permanent loss and/or impairment demonstrated" in 2000. 49Dr Wenden, also a consultant psychiatrist, saw the respondent on 10 November 2008. In respect of the history taken, he noted: "Mr Cornes told me that he was last well in 2003. He considers that his injury came on gradually, in 2000 an incident occurred at work when he reported a close friend for corruption and he told me that following this he was subjected to harassment, intimidation and estrangement from fellow workers. He told me that the person accused him of 'spoiling his life' .... Mr Cornes reported that gradually he developed feelings of shame at having gone against the culture of the police force and he felt guilt and noted the gradual onset of depressed mood, however he was able to continue working. He felt vindicated that the promotional system was changed as a result of his report. He saw his general practitioner in mid 2002 when he had difficulty coping and had received one session of counselling through Employee Assistance Program. ... ... Mr Cornes continued to work but over the next few years (2003 to 2005) he attended a number of incidents in the course of his work, which he claims contributed to his current condition and his eventual medical retirement. These included attending the suicide of a work colleague, giving chase to a robber who shot himself when cornered, attending a couple of major accidents on the F3 where a motor cyclist was decapitated and his organs had to be cleaned up off the road and put into a body bag, and a cyclist who was decapitated by another accident. He also was involved with a SIDS case which he found difficult." 50The reference by Dr Wenden to the "suicide of a work colleague" should be understood as a reference to the death of Mr Henderson, which occurred in 2002 and not in the years 2003-2005. The other incidents occurred in 2005. 51Dr Diamond saw the respondent on 30 July 2010. He took a full history from the respondent, which need not be repeated, except to note that it too revealed a degree of confusion as to the dates of particular events. However, the internal corruption incident was correctly identified as occurring in 2000. In assessing the degree of whole person impairment, Dr Diamond stated: "The development of psychiatrist symptoms occurred cumulatively over many years involving many different incidents. The change in the support network that surrounded him in the workplace altered significantly in 2000 when he reported corrupt behaviour .... Following that event the hitherto supportive milieu within the workplace dismantled. He progressively became more stressed and reacted negatively to further traumatic experiences that occurred in the workplace thereafter. Mr Cornes developed overt psychiatric illness sufficient for him to seek medical, psychological and psychiatric treatment and sufficient to impair his ability to continue in the workplace. His illness became overt in 2003." 52Dr Diamond then assessed his whole person impairment at 22%. Of importance for present purposes were the following questions and answers: "3. In your opinion was any proportion of the permanent impairment assessed by you due to an event or thing happening prior to 1 January 2002? If so, please advise whether in your opinion there is a causal connection between the impairments and events which occurred before 1 January 2002. In this case Mr Cornes was exposed to many events in the course of his employment. One cannot identify an event as a single cause of the impairment that led him to become overtly and clinically unwell sufficient for him to become impaired. The picture is clearly one of cumulative stressors that developed over many years but which did not cause overt or disabling psychiatric illness before 1 January 2002. 4. If you are of the opinion that there is a causal connection between the impairment and events which occurred before the commencement of the amendments on 1 January 2002, could be kind enough to assess the proportion of the impairment that is due to those events. In order to carry out the apportionment assessment one requires that an identified psychiatric illness was present in the period before 1 January 2002. There is no evidence that Mr Cornes suffered an identifiable or diagnosable psychiatric illness before 1 January 2002. At that time he was fully employed, present in the workplace, performing his normal day-to-day functions. His domestic and social activities were unimpaired and he was able to travel freely. He may well have been distressed and under further stress at the time but none of that stress was diagnosable as psychiatric illness. For these reasons there is no assessable psychiatric illness and consequently no impairment that one has to take into account in the process of apportionment in this case. ... 5. If you are of the opinion that there is no causal connection between the impairment and the events which occurred on 1 January 2002 would you explain your reason as to the lack of causal connection? From my previous answers it is not the case that there is no causal connection between events that occurred before 1 January 2002 and the eventual expression of overt psychiatric illness in 2003. The causal connection is one of cumulative stressors that frequently occur in the workplace involving workers such as police officers whose capacity to deal with stress may slowly become eroded. My experience is that one can seldom nominate a single causal event that produced psychiatric injury such as chronic posttraumatic stress order in workers such as police officers. Once the condition becomes overt there are frequently identified new stressors that occur that further exacerbate the condition and add to the disability that has become evident. This is what occurred with Mr Cornes in 2003 [2005?] when he experienced a trio of particularly gory and distressing fatal motor vehicle accidents in short succession. These together with other subsequent traumatic events in the workplace accelerated the disabling effects of the posttraumatic stress disorder that became overt and diagnosable at that time." 53The only witnesses who gave oral evidence in the District Court were Mr Cornes and Dr Diamond. It was put to Dr Diamond in cross-examination that in dealing in his report with the question of apportionment he had been considering whether there had been a "pre-existing injury, condition or abnormality", as identified in s 323 of the Workplace Injury Act. He agreed with that: Tcpt, 25/11/10, p 24(30). He agreed that he had been seeking to identify "overt symptoms because the diagnosis under DSM 4 is not made until the manifestation of those symptoms": p 24(35). Counsel for the STC then put to him an analogy (which he had earlier rejected: p 22(25)) of the effect of stressors as being equivalent to slowly filling a bucket to a point at which it overflows. Counsel then asked (Tcpt, pp 24-25): "Q. ... But what I'm really asking you is if you were to look at going back to my clumsy analogy of the bucket and looking at to what extent events before 1 January 2002 contributed to the entire bucket, is there some difficulty in approaching it on a time of exposure basis? A. Yes, I think there is because you're ignoring other factors which are the protective ones. I think it's been put to me previously about buckets and overflowing and levels of illness. But if you want to use that model you've got to use the model of a whole [hole?] in the bucket. It depends on how much stressor is pouring in and much coping in [is?] pouring out as to whether or not one can actually reach a point where you can apportion whether that person had developed any illness or not. That's why the model is difficult." 54Counsel then asked (at p 25(40)): "Q. Accepting that premise are you not saying that the events in 2005 added to his disability? A. I'm sure they did. I mean that was the point at which he became, I think, frankly suicidal and there were other things, I think I've mentioned them in the report and I certainly am aware of them."

Error in application of transitional provisions 55In written submissions to the trial judge, counsel for the STC relied upon passages in the judgment in Pearce at [111]-[112] and [122]. It is convenient to repeat what was said in those passages: "111 To the extent that the PTSD constituted, or was the consequence of, an injury received before the commencement of the amendments, the lump sum compensation amendments did not apply. However, once the Commissioner determined that the injury happened in 2005 because the PTSD constituted a disease within the terms of s 15 or s 16, it was an injury received after the commencement of the amendments on 1 January 2002. The transitional provisions are then engaged. 112 The reduction required by the transitional provision turns on a causal connection between the impairment and events which occurred before the commencement of the amendments. There may be various circumstances in which an injury is received after a particular date but is 'due to something' that occurred before that date. Circumstances which engage ss 15 or 16, providing for deemed dates of injury, could also engage the transitional provision and require a reduction under cl 3(2). They require the assessment of a 'proportion' of the impairment which is 'due to' events occurring before 2002. ... 122 ... Whatever the precise finding made by his Honour under s 323 of the Workplace Injury Act, that finding concerned the proportion of the impairment 'due to any previous injury'. That is not the same as a finding as to the proportion of an impairment, due to a previous event. Thus, a finding that the former could not be assessed on the evidence, does not necessarily entail a similar conclusion in relation to [the] latter test. The point of construction upon which the two provisions were found to have a differential operation identifies the possibility of different factual findings under each provision. The Commissioner had identified the only relevant 'injury'. Thus, as a matter of law, his Honour should have found there was no 'previous injury' for the purposes of s 323. The same conclusion would not necessarily follow in respect of the test under the transitional provision. Accordingly, no relevant finding of fact was made which would render the failure to apply the correct provision immaterial. The critical legal error was the failure to apply the transitional provisions of the Workers Compensation Act, Sch 6, Pt 18C, cl 3(2) and (3)." 56Dr Diamond assessed the respondent's whole person impairment, after he had been discharged from the police service, as 22%. The STC contended that a proportion of that disability was caused by traumatic stressors which had arisen after the notional date of injury and had not been certified. Further, it submitted that, relevantly for the transitional provisions, part of the assessed impairment was also due to events which had occurred prior to 1 January 2002. In order to obtain a payment, it was necessary that the degree of whole person impairment be at least 15%: Workers Compensation Act, s 65A(3). The STC submitted that, even accepting Dr Diamond's overall assessment of 22%, once appropriate reductions had been made, the level of assessment would fall below 15%. 57The complaint of the STC (pursuant to grounds (c) and (d)) was that the trial judge had failed to address its case based on the transitional provisions and on subsequent events. Dr Diamond, in the passage set out at [54] above, expressly accepted that the events, which it was common ground occurred in 2005, added to the respondent's disability. It is also consistent with Dr Diamond's evidence that events prior to January 2002 wore down the respondent's capacity to cope with trauma and stressors, so that it could properly be said that his ultimate diagnosis was, in part, "due to something that occurred" before that date. The trial judge appears to have approached the matter on the basis that there were no symptoms capable of supporting a diagnosis of psychological injury prior to January 2002: that, however, was not the question which was required to be addressed under the transitional provisions. 58Section 323 of the Workplace Injury Act recognises the difficulty that may arise with apportionment, even where there is an identifiable previous injury or pre-existing condition or abnormality. Where the extent of the necessary deduction "will be difficult or costly to determine" a deduction of 10% of the impairment is to be assumed: s 323(2). The transitional provisions do not provide for such a solution. Despite the inevitable difficulties in such a calculation, where it is found that earlier events have contributed to the level of impairment, a calculation must be made. 59In relation to subsequent events, which have not been the subject of a certificate under the Police Superannuation Act, s 10B, it is also necessary to make a deduction from the assessment of current impairment. That task may not be necessary if the court determined that the s 10B(3) certificate in fact covered events occurring after 6 August 2003. However, the trial judge failed to address the proper construction and effect of the certificate. In the circumstances of this case, that step was necessary and its omission involved a constructive failure to exercise the statutory jurisdiction. If the certificate did not cover the later period a deduction should have been made. Again, the difficulty, if not impossibility, of any degree of precision, did not avoid the need to make a calculation if a significant causal connection were accepted. 60The error in the present case was that the trial judge did not engage with this exercise. Nor did she reject the unequivocal evidence that required the exercise to be undertaken. At [166] she stated: "It does not seem to me that any proportion of Mr Cornes' permanent impairment is due to any injury after 6 August 2003. The evidence does not persuade me that any proportion of his impairment is due to any previous injury, pre-existing condition or abnormality." 61The statement in the first sentence of [166] disregarded the respondent's own evidence as to the traumatic events in 2005 and the unequivocal evidence of Dr Diamond set out at [54] above. It also disregarded the fact that the respondent's solicitors expressly relied on the causal effects of the 2005 incidents in their letter of 23 July 2007 making the claim under s 12D. Dr Lambeth's report, provided to support that claim, also placed reliance on these events, as did the reports of Drs Vickery and Wenden. The point was squarely raised by the STC in its written submissions (at pars 19-31) and orally. None of this was addressed by the trial judge in reaching her conclusion. That step involved no mere factual finding, but rather constituted a constructive failure to exercise the statutory jurisdiction conferred on the Court. 62The second sentence revealed a purported rejection of the test in s 323, not the transitional provisions. This was an error made by more than one of the medical experts. Despite her adoption of the terminology of the transitional provisions at [161] - see at [31] above - she proceeded in the next paragraph to state that "[n]one of those duties disabled Mr Cornes; their effects on him were transient." The factual findings may readily be accepted (as they must be), but they reveal an assumption that the test under the transitional provisions is the same as that under s 323: that approach is legally erroneous. The trial judge's failure to address the test under the transitional provisions, to determine whether the certified impairment was due in part to events which occurred before 1 January 2002, constituted a constructive failure to exercise the statutory jurisdiction and an error in point of law. 63Accordingly, the appeal should be allowed and the judgment below set aside. 64In a case where a significant psychiatric injury has been established, it is troubling that no final determination has yet been made, six years after the application was lodged seeking a payment under s 12D. It is necessary, however, to remit the matter for further hearing in the District Court, in the event that no agreement can be reached in a case in which legal costs must already be several times the maximum value of the claim.

Orders 65The following orders should be made: (1) Allow the appeal and set aside the orders made in the District Court on 30 June 2011. (2) Remit the matter to the District Court to determine the respondent's application under s 21 of the Police Regulation (Superannuation) Act 1906 according to law. (3) Order that the respondent pay the appellant's costs in this Court. (4) Grant the respondent a certificate under the Suitors' Fund Act 1951 (NSW). 66PRESTON CJ of LEC: I agree with Basten JA.

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: 09 August 2013

Suitors' Fund Act 1951(NSW)

Workers Compensation Legislation Amendment Act 2001(NSW)

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