Iedam v Insurance Australia Ltd t/as NRMA Insurance

By summons filed on 12 July 2018, Badreldin Iedam (the plaintiff) seeks orders pursuant to s 69 of the Supreme Court Act 1970 (NSW) in respect of the decision of the second defendant, Heidi Elliott, the Proper Officer (the Proper Officer) of the State Insurance Regulatory Authority (SIRA) made on 17 May 2018. The Proper Officer decided not to refer the plaintiff’s application for further assessment of her degree of permanent impairment arising from a motor vehicle accident, pursuant to s 62 of Motor Accidents Compensation Act 1999 (NSW) (the Decision).

The orders sought by the plaintiff are: first, an order setting aside the whole of the Decision; second, an order that the Proper Officer refer the plaintiff’s application for further assessment; and third, an order for costs. The summons does not comply with Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 59.4(c), which requires the grounds on which the relief is sought to be stated “with specificity” in the summons. The grounds relied upon are set out in the plaintiff’s submissions and are summarised below.

Unless otherwise stated all references to legislative provisions in these reasons are references to the Motor Accidents Compensation Act 1999 (NSW) (the Act).

UCPR, r 59.10 provides that proceedings for judicial review must be commenced within 3 months of the date of the decision. It is common ground that the proceedings were brought within time.

SIRA is a state government agency which administers the compulsory third party insurance and compensation scheme under ss 62 and 63 of the Act. The "proper officer" of SIRA is an employee designated as such under the Act pursuant to s 62(1B). Proper officers are authorised under the Act to decide whether to refer a medical assessment to medical assessors in SIRA’s Medical Assessment Service.

Part 3.4 of the Act relevantly provides:

Damages for non-economic loss may not be awarded unless the degree of permanent impairment is greater than 10%: s 131. Where there is a disagreement about the degree of permanent impairment suffered, the Court may not award damages for non-economic loss unless the degree of permanent impairment has been assessed by a medical assessor in accordance with s 133: s 132.

Section 133 relevantly provides:

Part 3.4 of the Act applies where there is a disagreement between the claimant and the insurer about whether the degree of permanent impairment of the injured person as a result of the injury caused by the motor accident is greater than 10%: s 58(1)(d).

Section 44(1)(d) provides that SIRA may issue Motor Accidents Medical Guidelines with respect to the procedures for the referral of disputes for assessment and review of assessments, under Part 3.4. Section 65(1) provides that medical assessments under Part 3.4 are subject to such guidelines (the Medical Guidelines). Clause 14.6 of the Medical Guidelines defines “material effect” for the purposes of s 62(1A) as including that the relevant matter:

It was common ground that the “Guidelines for the assessment of the degree of permanent impairment of an injured person” dated 1 October 2007 (the PI Guidelines) were applicable. Clause 1.2 of the PI Guidelines provides that they are “definitive with regard to the matters they address”. Clause 1.3 of the PI Guidelines provides:

Clause 1.19 of the PI Guidelines provides:

Clause 1.20 of the PI Guidelines sets out the three stages required to assess the degree of permanent impairment. The third stage requires the assessor to determine permanent impairment as a percentage.

Clause 1.21 of the PI Guidelines relevantly provides:

Clause 1.23 of the PI Guidelines provides:

Clause 4.1 of the PI Guidelines provides in part:

Clause 4.3 of the PI Guidelines relevantly provides:

Clause 4.6 of the PI Guidelines provides that the assessor should start with Table 4.1 to establish the appropriate category of spine impairment. The relevant parts of Table 4.1 are set out below:

It was common ground that the effect of Table 4.1 of the PI Guidelines was that, if the patient had a spine operation as a result of a compensable injury, the minimum diagnosis-related estimate (DRE) would be II (being the DRE without radiculopathy).

Table 72 of the PI Guidelines, entitled “DRE Lumbosacral Spine Impairment Categories”, includes the following:

In 2009 the plaintiff sought treatment for his low back symptoms from Dr Balsam Darwish, neurosurgeon. On 13 September 2013 the plaintiff was involved in a motor vehicle accident as a result of which he suffered injuries to his low back and shoulder.

The plaintiff claimed damages against Insurance Australia Ltd t/as NRMA Insurance, the first defendant (the NRMA), for injuries sustained in the motor vehicle accident. The NRMA is the compulsory third party insurer of the vehicle at fault and has admitted liability.

On 3 June 2016 the plaintiff applied to SIRA for an assessment of permanent impairment. On 17 June 2016 the NRMA lodged a reply to the plaintiff’s application. As there was no agreement as to the plaintiff’s whole person impairment (WPI), there was a dispute regarding the degree of permanent impairment within the meaning of s 58(1)(d).

SIRA referred the matter for assessment on 23 August 2016. On 9 September 2016 Dr Cameron assessed the plaintiff’s degree of permanent impairment for soft tissue injuries to his cervical spine, right shoulder, thoracic spine and lumbosacral spine at 6% WPI. On 21 September 2016 Dr McGlynn assessed the plaintiff’s degree of permanent impairment for laceration to his right ear, contusion to his jaw and scarring to his right shoulder at 1% WPI.

On 23 September 2016 Medical Assessor Alison Fitzgerald issued a certificate that the plaintiff’s combined WPI was 7%.

On 4 April 2018, the plaintiff lodged an application with SIRA for further assessment of a permanent impairment dispute. It appears from the wording of the application that it was made on both grounds referred to in to s 62(1)(a): namely, deterioration of the injuries sustained in the motor vehicle accident and additional relevant information about the injury. Each was said to be capable, if the matter proceeded to further assessment, of altering the outcome of the dispute from that certified in the previous assessment. In his application for further assessment, the plaintiff said:

In support of his application, the plaintiff relied on the circumstance that, on 8 March 2017, Dr Darwish performed an L4/5 discectomy and right L5 nerve root rhyzolysis. The plaintiff relied on the notes relating to the surgery and four reports of Dr Darwish dated 18 May 2017, 5 October 2017, 9 November 2017 and 4 February 2018 (which referred to an examination having been conducted on 27 April 2017). The plaintiff also relied on a medico-legal report dated 4 April 2017 of Dr Michael Fearnside, neurosurgeon. Dr Fearnside opined that the surgery was causally connected with the injuries to the plaintiff’s spine sustained in the motor vehicle accident as follows:

Dr Fearnside also expressed the view that plaintiff’s condition had not yet stabilised.

On 17 May 2018, the Proper Officer wrote to the parties informing them that she would not refer the matter for further medical assessment and provided her reasons, which are summarised below.

Although the Proper Officer may have been satisfied that the further material relied upon by the claimant constituted additional relevant information about the injury, she was not satisfied that it was capable of having a material effect on the outcome of the previous assessment (at [16]).

The Proper Officer noted the plaintiff’s submission that the lumbar spine surgery was causally related to the motor vehicle accident ([12] of the reasons) and the NRMA’s submission to the contrary. The Proper Officer also noted that Dr Darwish had been treating the plaintiff “well before the accident and there has been a progressive deterioration of his degenerative disease since that time” (at [14]).

The Proper Officer addressed the dispute concerning whether the plaintiff fell into DRE Category III as follows:

The Proper Officer also considered whether there was evidence that the injuries had stabilised, as follows:

The Proper Officer also referred to other factors as follows:

The Proper Officer concluded:

Mr Dodd, who appeared on behalf of the plaintiff, confirmed in oral submissions that the plaintiff challenged the Decision on several grounds set out in his written submissions (which are referred to below).

Mr Dodd’s principal argument was that it was not open to the Proper Officer to refuse to refer the matter in circumstances where there was material capable of establishing that the surgery on the plaintiff’s back was reasonably related to the injuries sustained in the motor vehicle accident. Mr Dodd argued that it was plain from the incontrovertible facts that the WPI to the plaintiff’s lumbar spine would be at least 5% if the surgery was reasonably required as a result of the motor vehicle accident. He submitted that, in these circumstances, the minimum combined WPI would be 12% (it was common ground that the 7% WPI for the shoulder combined with 5% WPI of the lumbar spine would produce a combined WPI of 12%), which would inevitably have a material effect within the meaning of cl 14.6.3 of the Medical Guidelines. Mr Dodd contended that, in these circumstances, it did not matter whether the defendant was classified DRE II (resulting in 5% WPI) or DRE III (resulting in 10% WPI). Mr Dodd submitted, in effect, that the plaintiff was entitled to have his matter referred.

Further, Mr Dodd contended that there were the following errors of law on the face of the record:

In the alternative, Mr Dodd contended (on the basis of the principal argument referred to above) that the Proper Officer failed to properly exercise her jurisdiction as the Decision was irrational, illogical and not based on findings or inferences of fact supported by logical grounds: Minister for Immigration v Li (2013) 249 CLR 332; [2013] HCA 18, especially at [105] and [106]. Mr Dodd also submitted that the Proper Officer failed to give any adequate reasons for the Decision.

The enquiry for the purposes of judicial review of the Decision is “whether the Proper Officer's opinion has been properly formed according to law”: QBE Insurance (Australia) Ltd v Miller [2013] NSWCA 442; (2013) 67 MVR 322 at [36] (Basten JA). At [36] of QBE Insurance (Australia) Ltd v Miller, Basten JA, at [36], cited Latham CJ in The Queen v Connell; Ex parte Hetton Bellbird Collieries Ltd (1944) 69 CLR 407 at 432; [1944] HCA 42:

The starting point is that the Proper Officer has a discretion in s 62(1), which is regulated by the opinion required to be formed under s 62(1A), but which is not determined by the matters in s 62(1A): Jubb v Insurance Australia Ltd [2016] NSWCA 153; (2016) 76 MVR 228 at [85]-[88]. Gleeson JA (Meagher and Payne JJA agreeing) said at [79]:

I respectfully adopt what was said by Basten JA in Dominice v Allianz Australia Insurance Ltd [2017] NSWCA 171; (2017) 81 MVR 249 at [5], [7] and [10] to the effect that a decision of a Proper Officer under s 62 (as in the present case) or s 63 (as in Dominice v Allianz Australia Insurance Ltd) will be amenable to judicial review only in limited circumstances because of the “gateway” role performed by such officer and the wording of the sections.

Mr Dodd’s submissions contained the implicit premise that, once the Proper Officer was satisfied, within the meaning of s 62(1A), that the deterioration or additional information was such as to be capable of having a material effect on the outcome of the previous assessment, the Proper Officer was obliged to refer the matter for further assessment. I reject this submission which is inconsistent with the plain meaning of s 62 and with Jubb v Insurance Australia Ltd.

It is also of significance to note the way in which the plaintiff’s application for referral for further assessment was put. The plaintiff contended that the back injury caused a WPI of 10% (which correlated with DRE impairment category III), which would put his combined WPI above 10%. The plaintiff did not argue in his submissions to the Proper Officer that, the fact of the surgery, irrespective of whether he was category II or III, would put his combined WPI above 10% in any event (on the assumption that causation was established). Thus, it is entirely possible that the Proper Officer considered that the dispute was whether the plaintiff’s WPI ought be categorised as DRE II or III. The Proper Officer is not to be criticised for failing to determine the application for further assessment on the basis of a matter not raised before her: AAI Ltd (t/as GIO) v Cooley [2016] NSWSC 434; (2016) 75 MVR 212.

Further, even had the plaintiff put his principal submission in this Court to the Proper Officer, it would still have been open to the Proper Officer to refuse to refer the matter in the exercise of her discretion under s 62(1). There was no evidence of the plaintiff having been “examined”, as distinct from “reviewed” at any time after April 2017. Thus there was insufficient material to determine whether the plaintiff’s condition had stabilised following the surgery on 8 March 2017. An assessment does not involve merely determining whether the WPI exceeds 10%; the assessor is obliged to determine the actual WPI as a percentage (cl 1.20 of the PI Guidelines). This cannot be done unless and until the patient’s condition has stabilised (as is made clear in cl 1.21 of the PI Guidelines).

It is apparent from the Proper Officer’s reasons that she refused to refer the matter for assessment because of the lack of evidence of any clinical examination of the plaintiff’s back in the period between the examination conducted by Dr Darwish on 27 April 2017 (referred to in his report of 4 February 2018) and the application for referral on 4 April 2018. Although Dr Darwish opined on 4 February 2018 that the plaintiff “has reached maximum medical improvement and his condition is unlikely to change by more than 3% in the coming year”, it was open to the Proper Officer to conclude on the basis of Dr Darwish’s reports that he had not actually examined the plaintiff since 27 April 2017. This evidentiary deficiency meant that the Proper Officer could not be satisfied that the plaintiff’s condition had stabilised. She noted Dr Fearnside’s opinion that it had not stabilised as at 4 April 2017.

Although there were several grounds which alleged that the Proper Officer had failed to take into account certain matters, these grounds do not amount to errors of law. For the purposes of impugning a decision on the basis of error of law on the face of the record, it is necessary that the consideration which is alleged not to have been taken into account, be one which the decision-maker was bound to take into account: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 39-41 (Mason J); [1986] HCA 40. The alleged matters were all matters of fact and therefore do not qualify as mandatory relevant considerations: Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323; [2001] HCA 30 at [74]. In any event, the factual matters referred to in the grounds were specifically referred to in the Proper Officer’s reasons for decision. Accordingly, it can be inferred that they were taken into account.

The plaintiff’s written submissions also contained the contention that the Proper Officer’s reasons were inadequate. The Proper Officer’s path of reasoning is sufficiently exposed in her reasons to meet her legal obligation: Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; [2013] HCA 43 at [55]. In any event, because of the way the plaintiff’s case was ultimately put by Mr Dodd, the real question to be decided is whether it was open to the Proper Officer to refuse to refer the matter for assessment under s 62(1)(a) of the Act. I have decided that it was.

For the reasons given above, no error has been shown in the exercise of the Proper Officer’s discretion under s 62(1)(a). The Proper Officer was entitled to refuse to refer the matter for further assessment until there was evidence to establish that the plaintiff’s condition had stabilised to permit such an assessment to be undertaken (as required by cll 1.21, 1.23 and 4.3 of the PI Guidelines). It was not necessary for the Proper Officer to do more than note that there were disputes about both causation and the appropriate DRE category if the plaintiff’s need for surgery reasonably arose by reason of injuries sustained in the accident.

Further, even were error to have been established, I would have refused relief on the ground that the plaintiff does not require any relief: Commissioner of Taxation v Futuris Corporation Limited (2008) 237 CLR 146; [2008] HCA 32 at [88]-[92]. All that the plaintiff needs to do to be entitled to a further exercise of the discretion by the Proper Officer is to make another application which remedies the evidentiary deficiency identified by the Proper Officer in [27] of her reasons.

At the conclusion of the hearing the parties agreed that there was no reason why costs ought not follow the event. However, following the hearing, Mr Dodd submitted in writing that, if I considered the plaintiff’s submissions to have merit but declined relief on a discretionary basis, the appropriate order was that each party pay his, or its (as the case may be) own costs of the proceedings. Mr Robinson SC, who appeared with Ms Gumbert on behalf of the NRMA, responded by providing written submissions to my Associate.

Mr Robinson submitted that I ought refuse to entertain Mr Dodd’s submissions since they were communicated without leave following the hearing. In the alternative, he submitted that, if I were minded to accept the submissions, the appropriate order was that costs ought follow the event.

I am satisfied that, although prior leave was not sought, it is in the interests of justice to consider Mr Dodd’s submissions, together with Mr Robinson’s submissions in response.

Both the basis for the Decision (insufficient evidence of stabilisation) and appropriate remedy for the plaintiff (submission of further evidence following stabilisation) were the subject of detailed written submissions filed by the NRMA on 14 September 2018. Notwithstanding receipt of these submissions, the plaintiff chose not to make a further application to the Proper Officer (accompanied by evidence to remedy the deficiency). Instead, he pressed his claim in this Court for the relief sought in the summons. I have declined relief, largely on the bases for which the NRMA contended. In these circumstances, the NRMA has succeeded. I am not persuaded that there is any reason why costs ought not follow the event in accordance with the general rule: UCPR, r 42.1.

For the reasons set out above, I make the following orders: