Fardell v Clinton Industries Pty Ltd

1. [1]

   HER HONOUR: This is a judicial review of the decision of an Appeal Panel in relation to a s 323 deduction under the Workers Injury Management and Workers Compensation Act 1998 (NSW) (“Workplace Injury Act”).

2. [2]

   The plaintiff is Ian Fardell. The first defendant is Clinton Industries Pty Ltd (“Clinton Industries”), the plaintiff’s employer. The Second defendant is an Appeal Panel constituted by Catherine McDonald and Drs Drew Dixon and J Brian Stephenson (“the Appeal Panel”). The third defendant is the President of the Personal Injury Commission of NSW. The second and third defendants filed submitting appearances. The parties relied on a joint court book (“CB”).

3. [3]

   By way of summons filed 17 June 2021 (“the summons”) the plaintiff relevantly seeks (CB 2):

   1. (1)

      a declaration pursuant to s 69 of the Supreme Court Act 1970 (NSW) (“Supreme Court Act”) that the decision and the statement of reasons for decision issued by the second defendant on 16 April 2021 and amended on 19 April 2021 is void and of no effect;

   2. (2)

      an order setting aside the decision and the statement of reasons for decision issued by the second defendant on 16 April 2021 and amended on 19 April 2021; and

   3. (3)

      an order that the matter be remitted to the second defendant and/or third defendant to be determined according to law.

Background

1. [4]

   On 30 March 1999, the plaintiff suffered an injury to his back while in the course of his employment with Clinton Industries. The injury occurred when the plaintiff picked up a piece of quarter-inch pipe from a low rack. He felt severe pain in his lower back which radiated down his leg. An MRI performed on 3 May 2000 disclosed a left posterior disc protrusion at L4/5.

2. [5]

   The plaintiff came under the care of Specialist Orthopaedic Surgeon, Dr Robert Kuru, who performed disc replacement surgery on 19 April 2004.

3. [6]

   On 24 September 2007, the plaintiff was examined by Dr Bosanquet at the request of Cambridge Integrated Services Australia (at that stage, the workers compensation scheme agent acting on behalf of Clinton Industries): CB 52. In his report dated 2 October 2007, Dr Bosanquet assessed a 24% whole person impairment (“WPI”) and made a 2/3rds deduction pursuant to s 323 of the Workplace Injury Act: CB 59. Dr Bosanquet attributed this deduction to a pre-existing condition that afflicted the plaintiff: CB 55. The pre-existing condition is described by Dr Bosanquet as having occurred in 1989 when the plaintiff was “working as an auto electrician, and suffered back pain which showed a disc rupture at L4/5 and he had a laminectomy”: CB 56. No further information is provided regarding the pre-existing injury.

4. [7]

   On 20 March 2017, the plaintiff was seen again by Dr Bosanquet: CB 60. He again assessed the plaintiff’s WPI at 24%: CB 63. He explained that this was on the basis that the plaintiff had undergone disc replacement surgery. However, on this occasion, Dr Bosanquet made a 1/10th deduction pursuant to s 323 of the Workplace Injury Act. He said (CB 63):

5. [8]

   Clinton Industries requested a supplementary report from Dr Bosanquet following his 20 March 2017 assessment: CB 65. Clinton Industries queried Dr Bosanquet's assessment of a 1/10th deduction and requested an amended report with the appropriate deduction for his previous injury: CB 65-7.

6. [9]

   In his supplementary report dated 29 March 2017, Dr Bosanquet explained that he had made a 1/10th deduction due to the plaintiff’s pre-existing impairment, applying clause 1.28 of the NSW Workers Compensation Guidelines for the Evaluation of Permanent Impairment 4th ed, which states (CB 67): "For the injury being assessed, the deduction is 1/10th of the assessed impairment, unless that is at odds with the available evidence." Dr Bosanquet went on to explain that he could not say categorically that the current impairment was greater as a result of the prior factor – that is, the laminectomy at L4/5 as being a cause for the spinal fusion: CB 67. He stated that many people have a spinal fusion without a prior laminectomy. He also said that in his opinion there is no evidence indicating that the prior factor caused or contributed to the impairment based on a reasonable probability greater than 50% likelihood: CB 67. He was not aware of evidence indicating this degree of certainty. He thus maintained his 1/10th deduction: CB 67.

7. [10]

   On 19 April 2017, Clinton Industries again wrote to Dr Bosanquet pointing out that in his 30 September 2007 assessment of the plaintiff, he had apportioned 2/3rds of the impairment to the previous injury. Dr Bosanquet replied (CB 65):

8. [11]

   On 6 March 2018, the plaintiff was seen by Dr Negus: CB 72. Dr Negus considered that the plaintiff had suffered an L4/5 disc injury, leading to disc replacement surgery: CB 78. While he did not think that the plaintiff had reached maximum medical improvement, he made an assessment of WPI at that time. He assessed the plaintiff as Diagnosis Related Estimate (“DRE”) Category IV, which equates to 20% WPI, as he had had a disc replacement surgery: CB 79. To this, he added 2% for restriction in activities of daily living and 3% because of residual radicular symptoms. This combined to 24% WPI: CB 79. Dr Negus made a 10% deduction pursuant to s 323 of the Workplace Injury Act. His reasons were "he has had previous spinal surgery at the L4/5 level and was not pain-free." This resulted in Dr Negus calculating the WPI of the plaintiff at 22%: CB 79.

9. [12]

   On 4 March 2020, proceedings were commenced in the Workers Compensation Commission. The proceedings sought an assessment as to whether the degree of permanent impairment is more than 20% of the purposes of s 39 of the Workers Compensation Act 1987 (NSW) (“Workers Compensation Act”). The matter was referred for assessment by an Approved Medical Specialist.

The relevant legislation

1. [13]

   The relevant provisions of the Workplace Injury Act read:

The law

1. [14]

   Both parties referred to the decision of Cole v Wenaline Pty Ltd [2010] NSWSC 78 (“Cole”). In Cole, Schmidt J was considering a case with similar facts. In that matter, the worker had initially suffered an injury to his back in 1976 for which he had undergone surgery in the form of an L4/5 discectomy. In October 2005, he suffered an injury at work while he was maneuvering a 44-gallon drum of oil and fuel. As a result of that Injury, the worker underwent a further discectomy at the same level as the previous surgery. The majority of an Appeal Panel had made a deduction of one half pursuant to s 323 of the Workplace Injury Act. In granting relief, Her Honour described how the Appeal Panel incorrectly applied a section 323 deduction at [28]-[30]:

2. [15]

   In Cole, Her Honour further explained the correct legal reasoning to be observed when applying a deduction under s 323 of the Workplace Injury Act when she said at [38]:

3. [16]

   In Elcheikh v Diamond Formwork (NSW) Pty Limited (in liquidation) [2013] NSWSC 365 (“Elcheikh”), again, Schmidt J considered the application of s 323 of the Workplace Injury Act and confirmed that a deduction under that section involves a three step process. At [126] it reads:

4. [17]

   In Elcheikh, Her Honour also considered what reasons were required in circumstances where the conclusion was reached that the deduction was greater than 10%. Her Honour said at [139]-[141]:

5. [18]

   The parties also referred to Ryder v Sundance Bakehouse [2015] NSWSC 526 (“Ryder”). In Ryder, Campbell J provided further explanation of the s 323 deduction (at [45]):

The decision of the AMS dated 27 October 2020

1. [19]

   On 27 October 2020, in accordance with the referral, the plaintiff was seen by an Approved Medical Specialist, Dr Tim Anderson, Occupational Therapist, (“AMS”) and a medical assessment certificate was issued on that date: CB 159.

2. [20]

   Under the heading ‘Summary of injuries and diagnoses’ the AMS stated (CB 162):

3. [21]

   The AMS assessed a 24% WPI: CB 163. He explained that the plaintiff had a disc replacement at the L4/5 articulation: CB 163-4. This placed him in DRE Lumbar Category IV. He allowed a further 2% for activities of daily living and an additional 3% because of the continuing effect of radiculopathy. This combined to a total of 24%: CB 164.

4. [22]

   The AMS went on to make a deduction pursuant to s 323 of the Workplace Injury Act of 1/3rd. His reasoning for the deduction was (CB 164):

Appeal against the decision of the AMS

1. [23]

   On 23 February 2021, the plaintiff lodged an appeal pursuant to s 327 of the Workplace Injury Act: CB 166. The appeal did not dispute the overall assessment of 24% WPI. The plaintiff challenged the deduction pursuant to s 323 of the Workplace Injury Act. The plaintiff submitted that the Medical Assessment Certificate contains a demonstrable error.

2. [24]

   In his submissions to the Appeal Panel, the plaintiff stated at [18]-[19], [21] and [23] (CB 175-6):

3. [25]

   On 11 January 2021, Clinton Industries filed a notice of opposition: CB 177. Clinton Industries agreed with the plaintiff’s statement concerning the applicable law and made submissions about the nature and extent of the pre-existing condition. Clinton Industries asserted at [24], [28] and [29] as follows (CB 183-4):

The Appeal Panel’s decision dated 19 April 2021

1. [26]

   On 16 April 2021, the matter came before the Appeal Panel who gave written reasons for their decision: CB 185. The Appeal Panel’s reasons were amended on 19 April 2021: CB 192.

2. [27]

   Under the heading “submissions” the Appeal Panel summarised the parties submissions as follows (CB 193):

3. [28]

   It then summarised the decision of the AMS and reproduced at [22]-[23] the AMS’ reasons for the s 323 deduction (CB 195):

4. [29]

   Next the Appeal Panel turned its attention to the medical evidence. Under the heading ‘Consideration’ the Appeal Panel set out ss 323(1) and (2) of the Workplace Injury Act, summarised Cole and observed (CB 197):

5. [30]

   At [44] to [48] the Appeal Panel concluded (CB 198):

Grounds of judicial review

1. [31]

   For the purposes of this judgment, Grounds 2(a)-(f) as set out in the summons will be referred to as Grounds (1)-(6). They are as follows (CB 4-5):

   1. (1)

      the Appeal Panel erred in point of law or committed jurisdictional error when it held that the Approved Medical Specialist had given reasons why the previous injury had resulted in a greater impairment than would otherwise had been the case;

   2. (2)

      the Appeal Panel erred in point of law or committed jurisdictional error when it held that the deduction the Approved Medical Assessor had correctly applied the law when considering a s 323 deduction;

   3. (3)

      the Appeal Panel erred in point of law or committed jurisdictional error when it considered that the appropriateness of a deduction pursuant to s 323 of the Workplace Injury Act can be illustrated by calculating the pre-existing impairment and assuming this equated to the extent of a deduction;

   4. (4)

      the Appeal Panel erred in point of law or committed jurisdictional error when it failed to properly consider whether the pre-existing condition in fact contributed to the matters relevant to an assessment of whole person impairment;

   5. (5)

      the Appeal Panel erred in point of law or committed jurisdictional error when it considered that it was relevant that it was unlikely that disc replacement surgery would have been offered in the absence of the pre-existing condition when this had not been submitted by Clinton Industries and for which there was no evidence; and

   6. (6)

      the second defendant erred in point of law or committed jurisdictional error when it failed to afford the plaintiff procedural fairness by considering that disc replacement surgery would not have been offered in the absence of the previous surgery when this had not been submitted by Clinton Industries and without giving the plaintiff an opportunity to be heard.

2. [32]

   From my reading of these grounds of review, it would appear that Judicial Grounds (1)-(4) set out strikingly similar arguments. In fact, each of these 4 grounds of judicial review concern the Appeal Panel’s application of s 323 of the Workplace Injury Act, although expressed in 4 different ways. It would also appear that the plaintiff, in the drafting of these grounds, has failed to identify, with the necessary precision, the distinction between error on the face of the record and jurisdictional error. This approach is similar to that which was negatively received by Leeming JA (with whom Basten JA and Simpson AJA agreed) in Insurance Australia Group Ltd t/as NRMA Insurance v Keen [2021] NSWCA 287 at [25]-[26].

3. [33]

   The distinctions between jurisdictional error and error on the face of the record were recently emphasised by Leeming JA (with whom Gleeson and Payne JJA agreed) in Sleiman v Gadalla Pty Ltd [2021] NSWCA 236, where His Honour stated at [20]:

4. [34]

   In any event, I will summarise the plaintiff’s overlapping arguments in Judicial Grounds (1)-(4). I will then address Judicial Grounds (1)-(4) together followed by my resolution.

Judicial Grounds (1)-(4) – Section 323 deduction

1. [35]

   The plaintiff’s argument comprised within grounds (1)-(4) of the Judicial Review are that the Appeal Panel erred in law and committed jurisdictional error when it held that the AMS had correctly applied the law when considering a s 323 deduction under the Workplace Injury Act.

2. [36]

   The plaintiff referred to the AMS's reasoning, at [11] of the Medical Assessment Certificate, where it was noted that the plaintiff had a discectomy at the L4/5 articulation in 1989. There the AMS stated that after the more recent event, the specific clinical management was a disc replacement and observed that this was a more substantial clinical intervention than the discectomy. His only reasoning was "with the extensive pre-existing condition from 1989, there would reasonably be a significant deduction."

3. [37]

   The plaintiff noted that the AMS did not give any reasons to explain why or how the pre-existing condition from 1989 contributed to the impairment that was being assessed in October 2020. This was in circumstances where the AMS had before him the reports of Dr Bosanquet, particularly the report of 29 March 2017 where he had applied the correct test and had opined that he could not say that the current impairment was greater than it otherwise would have been and there was no evidence indicating that a prior factor caused or contributed to the impairment.

4. [38]

   In the plaintiff’s submission, in those circumstances the AMS was required to give reasons explaining how the pre-existing condition contributed to the current impairment and giving reasons why he disagreed with the differing opinions expressed by Dr Bosanquet.

5. [39]

   At the hearing in this Court, Counsel for the plaintiff explained that this constituted a failure of the AMS to set out steps two and three of the legal test set out by Schmidt J in Cole (T10.5-35):

6. [40]

   The plaintiff submitted that the Appeal Panel also failed to address this aspect of the plaintiff's case noting its reasoning at [44] when it said:

7. [41]

   The plaintiff submitted that the Appeal Panel did not address the question of whether the AMS had properly applied the test set out by Schmidt J in Cole and Elcheikh. It did not identify where the AMS had found that the previous condition had meant that there was now a greater impairment and it did not identify where the AMS had found or explained that there was a causal connection such that it could be said that part of the current impairment results from the pre-existing condition. The AMS had only said that the disc replacement was a more substantial clinical intervention than a discectomy. The approach adopted by the AMS was merely a comparison between a disc excision and a disc replacement as a mode of clinical intervention.

8. [42]

   The plaintiff noted that the Appeal Panel sought to support the decision of the AMS at [49] of its reasons. It said that the appropriateness of the deduction can be illustrated by considering the likely assessment following the surgery in 1989. It said that based on the material in the file that, assuming a laminectomy had been undertaken anytime during the intervening period, the plaintiff would have probably been assessed in DRE Lumbar Category II with 5% WPI with the addition of 2 or 3% for the impact on activities of daily living, resulting in assessment of 7 or 8% WPI, which equates to about 1/3rd of the current assessment.

9. [43]

   The plaintiff submitted that to the extent that the Appeal Panel relied upon this reasoning, it was in error. It had been clearly established in Cole that a deduction is not to be made by way of a mere assessment of the impairment that resulted from the previous injury. It was irrelevant to ask the hypothetical question of "what was the impairment pre-existing". This was the very error that was made by the medical members of the appeal panel in Cole, where the medical members had based their opinion upon the fact that the plaintiff in that case would have been DRE Lumbar Category Ill as a result of the previous discectomy.

10. [44]

    In the plaintiff’s submission, what was required was an analysis of whether and how the previous injury contributed to the current impairment. That question is not answered by merely doing an assessment of the impairment resulting from the previous injury. The plaintiff referred to the decision of Simpson AJ in Marks v Secretary, Department of Communities and Justice (No 2) [2021] NSWSC 616 in which Her Honour held that Guideline 11.10 of the Workers Compensation Guidelines, with its focus on pre-injury level of functioning, was inconsistent with s 323(1) of the Workplace Injury Act and invalid. To the extent that the Appeal Panel was of the view that the appropriate deduction was to be measured by making a separate assessment of an impairment resulting solely from the previous injury, it was acting contrary to the law and therefore taking into account an irrelevant consideration. To that extent, it was making an error of law on the face of the record.

11. [45]

    The plaintiff also referred to Moy v Emoleum Services Pty Limited [2015] NSWSC 1062 (“Moy”), in which Davies J held that it was an error of law for an Appeal Panel to fail to properly consider the application of s 323(2) of the Workplace Injury Act. His Honour said that the panel's reasoning of "it would simply be at odds with the evidence to assume that it is 10%" was not adequate. His Honour said at [57]:

12. [46]

    In the plaintiff’s contention the Appeal Panel repeated the error which had been made by the AMS. The AMS had not carried out any of those steps, and there had been no proper consideration of this question by the AMS. All that the AMS had said when considering the impairment assessed by Dr Negus was "with great respect, I believe this is very much at odds with the existing clinical evidence. The deduction should be considerably more than 1/10th." The AMS gave no other reasons for this conclusion other than that the pre-existing condition was extensive. The AMS had failed to consider how the pre-existing condition related to the impairment actually being assessed and accordingly gave no explanation as to why the deduction of 1/10th was inconsistent with the evidence.

13. [47]

    The Appeal Panel, to the extent that it could be seen to be making its own assessment, also failed to address this question. The plaintiff submitted that by acting in this way the Appeal Panel has made an error of law on the face of the record and committed jurisdictional error.

14. [48]

    When asked about the ruling of the full Federal Court in Minister for Immigration and Ethnic Affairs v Wu Shan Liang [1996] HCA 6;185 CLR 259, that a court should not be concerned with looseness in the language nor with unhappy phrasing of the reasons of an administrative decision-maker, Counsel for the plaintiff responded (T17.13-27):

15. [49]

    Clinton Industries noted that the appeal before the Appeal Panel was made on the grounds that the original decision maker, the AMS, had erred in failing to apply the correct legal test in determining whether any proportion of the plaintiff’s assessed lumbar impairment resulted from a previous injury or pre-existing condition or abnormality.

16. [50]

    However, Clinton Industries submitted that the plaintiff’s claim was predicated on the basis that there was such a contribution from a pre-existing condition. The doctor upon whose opinion he relied, said that there was. No medical practitioner whose evidence was presented said otherwise. There was a compelling body of medical evidence which supported the existence of a pre-existing back condition that had been so serious as to keep the plaintiff out of the work force for several years and caused him to undertake retraining in order to take up the relatively undemanding duties required of him in his employment with Clinton Industries. In December 1990, he was certified by Dr Peter Wearne as having a lower back vulnerability. A clinical picture of his condition after commencing work as a clerk with Clinton Industries but before his work injury can be found in the report of Dr Richard Evans who reported to the plaintiff’s then lawyers on 29 October 1996. Further medical assessments closer to the date of injury are contained in reports of Dr Chan dated 20 June 1998 and 14 November 1998.

17. [51]

    The circumstances of the plaintiff’s injury with Clinton Industries were relatively innocuous. A Judge of the Compensation Court of NSW had previously found that 2/3rds of the plaintiff’s back impairment (as opposed to his lumbar WPI) resulting from his work injury was due to a pre-existing condition.

18. [52]

    Clinton Industries submitted that a finding that a proportion of the plaintiff’s assessed lumbar impairment resulted from a previous injury or pre-existing condition or abnormality was not a step in the required deliberations of the AMS. It was not part of the medical dispute and was simply not an issue and in those circumstances, it was Clinton Industries’ submission that the Appeal Panel accorded the plaintiff’s submission more attention than it warranted. However, it cannot have erred in dismissing an appeal challenging the determination of a matter that was not in issue at first instance.

19. [53]

    In bolstering its argument, Clinton Industries made close reference to the procedural history of the matter. I need not repeat that summary here, as the background of the matter is set out earlier in this judgment from [4].

20. [54]

    Clinton Industries noted that the plaintiff appealed under the Workplace Injury Act citing demonstrable error by the failure of the AMS to address the question of whether the plaintiff’s previous back injury has meant there is now a greater impairment than would otherwise be the case, and arguing that this constituted the same error as identified by Schmidt J in Cole.

21. [55]

    In Clinton Industries submission, by application of the reasoning of Davies J in NSW Police Force, the appeal and the Appeal Panel’s consideration of it were confined to the error identified in the plaintiff’s submission.

22. [56]

    Clinton Industries noted that the Appeal Panel dealt with the plaintiff’s ground of appeal at [44] of its reasons, concluding that the AMS had in fact considered the question, referring to both the medical history and the opinions of qualified doctors, including Dr Negus. However, given the way in which the application had been framed, there was never any issue that a proportion of the plaintiff’s assessed impairment was due to his pre-existing injury or condition. The plaintiff’s notice to Employers Mutual NSW Limited of 2 March 2020 explicitly adopted the opinion of Dr Negus who had certified a deduction. No medical opinion had suggested otherwise. A Judge of the Compensation Court had previously applied s 323 of the Workplace Injury Act to deduct two thirds from the assessed impairment of the plaintiff’s back. The judicial decision did not result in an issue estoppel because the Compensation Court was assessing the impairment of the back as opposed to the WPI of the lumbar spine. Nevertheless, it underscores the fact that there was general acceptance that the medical condition of the plaintiff’s low back was due in large part to a condition which pre-dated his employment with Clinton Industries.

23. [57]

    Thus in Clinton Industries’ submission, there was no obligation whatsoever for the AMS to provide reasons for concluding that a proportion of the assessed WPI was due to a pre-existing condition or abnormality. It was simply not an issue.

24. [58]

    The obligation of an Appeal Panel to give reasons in this context was considered by Campbell J in Ryder, where his Honour referred (at [24]) to the judgment of Basten JA in Vegan v Campbelltown City Council (2006) 67 NSWLR 372 (“Vegan”):

25. [59]

    In this instance there was no such factual dispute before the AMS and thus no need for the Appeal Panel to make primary findings of fact.

26. [60]

    Clinton Industries submitted that in providing its reasons contained in its decision (at [44]-[50]) the Appeal Panel gave the plaintiff’s submissions and appeal ground greater consideration than was warranted. In so doing the Appeal Panel cannot have erred in law in such a manner as to attract the intervention of the Court pursuant to s 69 of the Supreme Court Act. The only criticism that could be made of the Appeal Panel’s reasons is that they were unnecessary.

27. [61]

    At the hearing, Counsel for Clinton Industries referred to Vitaz v Westform (NSW) Pty Ltd [2011] NSWCA 254 (“Vitaz”) where at [43] Basten JA (with whom McColl JA and Handley AJA agreed) stated:

28. [62]

    Counsel for Clinton Industries submitted that there was no contest based on the medical evidence that obliged the AMS to undertake the exposition of the sort of reasons that the plaintiff argues for. As such the Appeal Panel found that there was no error in the AMS’ finding on that point (T26.10-16).

29. [63]

    Counsel for Clinton Industries also referred to Vitaz at [34] where Basten JA stated:

30. [64]

    Counsel submitted (at T28.40-50) that even though the Appeal Panel didn't itself cite Basten JA's approach in Vitaz to the giving of reasons by the AMS, his commentary underscores the fact that their decision to affirm the medical assessment certificate was without error. Once one reaches that conclusion there's no basis for relief pursuant to s 69 of the Supreme Court Act to be dispensed in this matter. Whatever comments the Appeal Panel may have made about the quantification of WPI be it before the dates of this injury or otherwise is interesting, but it doesn't vitiate the decision that it has made.

31. [65]

    With regards to the plaintiff’s reliance upon the decisions of Cole or Moy, Counsel for Clinton Industries submitted (at T27.11-18) that this current case differentiates from these decisions as this is not a case where the Appeal Panel set aside a medical assessment certificate of the AMS and then set about undertaking their own assessment. All the Appeal Panel did was confirm the medical assessment certificate of the AMS. Cole and Moy were cases where the Appeal Panel wanted to undertake its own assessment and different considerations and principles clearly apply when they're undertaking that task.

32. [66]

    The plaintiff noted that Clinton Industries submitted that there was no issue about a s 323 deduction, and submitted that simply not correct for several reasons.

33. [67]

    The first of these was that the referral to the AMS specifically directed attention to the question consistent with s 319 being "(d) whether any proportion of permanent impairment is due to any previous injury or pre-existing condition or abnormality, and the extent of that proportion,"

34. [68]

    The second was that an examination of the medical material also discloses that there is a dispute about the s 323 deduction. The plaintiff noted that Dr Negus had made a deduction of 10% though the deduction was not explained applying the correct legal principles.

35. [69]

    By contrast Clinton Industries had relied upon the opinion of Dr Bosanquet who initially opined that a 10% deduction was appropriate but upon further questioning, changed his opinion to a two thirds deduction. In concordance with its primary submissions, the plaintiff submitted that Dr Bosanquet did not explain his reasoning other than to acknowledge that he had previously made a two thirds deduction.

36. [70]

    In the plaintiff’s submission it is apparent from a consideration of the medical material that the nature and extent of any s 323 deduction was the center of the dispute, and in fact it was the only matter in dispute. Both Dr Bosanquet and Dr Negus had assessed an impairment of 24%. The only point of difference between them was the s 323 deduction.

37. [71]

    It follows that a primary task for the AMS was to make an assessment of whether there was a s 323 deduction and if so to what extent was the impairment due to the pre-existing condition. That task required the application of the settled principles as set out in the primary submissions. Those principles apply to both a determination of whether there is a deduction and if so, the extent of the deduction,

38. [72]

    The plaintiff opined that it is significant that Clinton Industries did not attempt to submit that the Appeal Panel applied the correct test. The plaintiff noted that there is no submission that the AMS found that the previous surgery in fact contributed to the current impairment or that the previous surgery meant that the impairment is greater than in otherwise would have been, or that the AMS or the Appeal Panel had addressed any of those matters.

39. [73]

    In the plaintiff’s submission the inference to be drawn is that Clinton Industries concedes that both the AMS and the Appeal Panel failed to apply the correct legal test and in doing so made an error of law on the face of the record and made a jurisdictional error. As set out in the primary submissions an examination of the reasons of the AMS and the Appeal Panel discloses that there was such an error.

40. [74]

    It is Clinton Industries’ argument that a finding that a proportion of the plaintiff’s assessed lumbar impairment resulted from a previous injury or pre-existing condition or abnormality was not a step in the required deliberations of the AMS because it had never been in issue and was not part of the medical dispute. According to Clinton Industries, as the s 323 deduction was not part of the medical dispute, the Appeal Panel were not required to provide reasons with regards to this issue as per Vegan and were also confined to the error identified by the appeal grounds as per NSW Police Force.

41. [75]

    As it is not disputed that there was a pre-existing injury or that the plaintiff’s WPI was calculated at 24%, in my view the central issue of the dispute before the AMS was the s 323 deduction. The amended referral to the AMS (CB 212), states that the medical dispute involves “whether any proportion of permanent impairment is due to any previous injury or pre-existing condition or abnormality, and the extent of that proportion (s 319(d))”. The AMS acknowledged “[t]he following matters have been referred for assessment (s 319 of the 1998 Act)”. The AMS addressed this issue under the heading ‘Deduction (if any) for the proportion of the impairment that is due to previous injury or pre-existing condition or abnormality’.

42. [76]

    The legal principles to be applied when making a deduction under s 323 of the Workplace Injury Act have been clearly set out by Schmidt J in Cole. As set out earlier, Her Honour stated (at [38]) that this involves a three step test which requires a consideration of firstly, what the level of impairment after the second injury was; secondly, whether a proportion of that impairment was due to the first injury; and thirdly, what that proportion was.

43. [77]

    In Cole, at [30] Schmidt J stated that s 323 of the Workplace Injury Act does not permit an assessment to be made on the basis of an assumption or hypothesis, that once a particular injury has occurred, it will always, ' irrespective of outcome', contribute to the impairment flowing from any subsequent injury. The assessment must have regard to the evidence as to the actual consequences of the earlier injury, pre­existing condition or abnormality. The extent that the later impairment was due to the earlier injury, pre-existing condition or abnormality must be determined.

44. [78]

    With regards to the s 323 deduction made to the calculation of the plaintiff’s WPI, the AMS’ assessment dated 27 October 2020 states that “in 1989, Mr Fardell had a discectomy at the L4/5 articulation. After this more recent event, the specific clinical management was a disc replacement. This is a more substantial clinical intervention. With the extensive pre-existing condition from 1989, there would reasonably be significant deduction.” In evaluating the pre-existing condition with the disc excision with the much more recent event where there was a disc replacement, the AMS was of the opinion that there should be a one-third deduction for the pre-existing condition and that the event that occurred on 30 March 1999 would constitute two-thirds of the current impairment.

45. [79]

    From a fair reading of the AMS’ assessment, it would appear that in making a 1/3rd deduction under s 323 of the Workplace Injury Act, the AMS has failed to provide an evidentiary basis in determining whether a proportion of the plaintiff’s current injury was in relation to the previously existing injury and if so what was this proportion. The AMS did not apply steps 2 and 3 of the legal test set out by Schmidt J in Cole. Rather, the reasoning provided for this deduction was that “with the extensive pre-existing condition from 1989, there would reasonably be a significant deduction”. It would appear that the AMS has made his determination on the basis of an assumption or hypothesis that the occurrence of the earlier injury suffered by the plaintiff to his L4/5 will always contribute to impairment following from subsequent injuries, irrespective of outcome and has, as such, fallen into the same error described by Schmidt J in Cole (at [30]).

46. [80]

    Similarly, the Appeal Panel, in its decision dated 16 April 2021, failed to provide the necessary evidentiary nexus between the first injury suffered by the plaintiff in 1989 and the degree that this injury contributed to the second injury. Again, an assumptive approach was taken in which the Appeal Panel, in supporting the decision of the AMS, stated that based on the evidence in the file and assuming a laminectomy had been undertaken, at any time during the intervening period, the plaintiff would probably have been assessed in DRE Lumbar Category II at 5% WPI with the addition of 2 or 3% for the impact on the activities of daily living, resulting in an assessment of 7 to 8% WPI, which equates to about one-third of the current assessment.

47. [81]

    As established in Cole, a deduction is not to be made by way of assessing the impairment that would have resulted from the previous injury and deducting this from the current injury. The Appeal Panel was required to analysis whether and how the previous injury contributed to the current injury and the extent of this contribution. The Appeal Panel failed to recognise an error and then failed to analyse whether and how the previous injury contributed to the current injury and the extent of its contribution.

48. [82]

    Clinton Industries referred to the decision of Vitaz where at [43] Basten J stated 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. Basten J explained that 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. His Honour concluded that 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.

49. [83]

    However, Vitaz differs from the present case. In Vitaz, the Appeal Panel made a 1/10th deduction pursuant to s 323(2) of the Workplace Injury Act which provides that if the extent of a deduction 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 is 10% of the impairment, unless this assumption is at odds with the available evidence. In those circumstances it is not necessary for the Appeal Panel to provide reasons as to why the deduction applies where the alternative conclusion is not presented by evidence. This factual situation is different from these current proceedings where a deduction of 1/3rd was made where there was medical evidence supporting an alternative conclusion.

50. [84]

    It is my view that both the AMS and the Appeal Panel have failed to correctly apply the test outlined by Schmidt J in Cole (at [38]) with regards to s 323 deductions. In doing so, the Appeal Panel has committed an error of law on the face of the record. The decision of the Appeal Panel should be set aside. It is now unnecessary to consider Judicial Grounds (5) and (6).

Result

1. [85]

   The result is that the plaintiff has established that in relation Judicial Grounds (1)-(4) the Appeal Panel erred in law in its application of s 323. Therefore, the Appeal Panel’s decision dated 16 April 2021 should be set aside. The Judicial Review is successful. The plaintiff has sought that this matter be referred to a differently constituted Appeal Panel. In the absence of any allegations of bias, it is my view that the composition of the Appeal Panel is a matter for determination by the President of the Personal Injuries Commission. The decision is to be remitted to the third defendant for determination as according to law.

Costs

1. [86]

   Costs are discretionary. Costs usually follow the event. The first defendant is to pay the plaintiff’s costs on an ordinary basis.

   1. (1)

      The decision and statement of reasons of the second defendant dated 16 April 2021 is set aside.

   2. (2)

      The proceedings are to be remitted to the third defendant for determination as according to law.

   3. (3)

      The first defendant is to pay the plaintiff’s costs