Insurance Australia Limited t/a NRMA Limited v Michael (Woclaw) Kresan

Rule 12.11(1) of the Uniform Civil Procedure Rules 2005 (UCPR) provides:

Michael Kresan was involved in a motor vehicle accident on 5 January 2011 when the car he was driving was, while stationery, run into from behind. Mr Kresan made application for compensation.

On 10 May 2013 Dr David Johnson issued a certificate under Part 3.4 of the Motor Accidents Compensation Act 1999 (NSW) certifying that in the accident Mr Kresan suffered the following injuries:

Dr Johnson certified that the degree of whole person impairment due to the accident was:

In his Certificate, Dr Johnson recorded information apparently received from Dr Tham of the North West General Practice, a doctor whom Mr Kresan consulted following the accident. The latest document from or by Dr Tham which was referred to seems to be one of 1 June 2011.

On 10 June 2014 the Plaintiff lodged with the Motor Accidents Authority an application for further assessment. As the reason for the application, it was asserted:

These reasons follow the terms of s 62 of the Motor Accidents Compensation Act which, so far as is relevant, provides:

Notwithstanding the somewhat elliptical way in which the section is expressed, it envisages that, if the additional information is so capable, the proper officer will refer the matter for further assessment – QBE Insurance (Australia) Ltd v Miller [2013] NSWCA 442 at [3]-[4]. The Medical Assessment Guidelines, clause 14.8, envisage that the Proper Officer will provide “brief written reasons for the decisions”.

In its Application the Plaintiff identified the additional documentation on which it relied as:

On 24 July 2014 the Second Defendant, a “Proper Officer” of the Medical Assessment Service, rejected the application for a further assessment. The Proper Officer’s reasons included the following:

By summons filed in this Court on 22 October 2014 the Plaintiff claims, inter alia, prerogative or declaratory relief setting aside the determination of the Second Defendant. In summary, the grounds urged in support of that relief are:

In these grounds the “clinical records” are those I have listed above.

Each of the Defendants, respectively, Mr Kresan, the Proper Officer Ms Jane Probert, and the Motor Accident Authority has filed an Appearance submitting to making of all orders sought, save as to costs.

In the additional documentation on which the Plaintiff relied in its application for a further assessment there are many references to each of Mr Kresan’s lumbar spine and left shoulder. In these proceedings the Plaintiff concedes that it is only material relating to the left shoulder which is relevant to the relief it seeks so in quoting below from the 12 March response and other clinical records, I shall largely limit myself to that area.

Dr Tham’s response of 12 March 2014 included the following:

The clinical records received in April and May 2014 consist of what appear to be more or less contemporaneous doctors’ notes made by Dr Tham and other doctors within the same practice together with the contents of reports received from others such as pathologists, radiologists and specialists. Within the three groups of documents there is much repetition but arguably relevant entries in the doctors’ notes include the following:

Entries in the clinical records representing parts of reports from others and later than 5 January 2011 include the following (The dates stated are those when the images or reports were collected, there commonly being no date stated as to when the relevant examination was carried out. However the pattern of the documents suggests that there is unlikely to be any significant time lapse between the event and the date of collection.):

The nature of the task imposed by s 62 of the Motor Accidents Compensation Act and the limits on a Court asked to review a decision of a Proper Officer have been considered on a number of occasions and there is no need for me to say more on the topic than that the capacity of the additional information to affect the outcome of the previous assessment is a matter for “the subjective satisfaction of the proper officer” – Rodger v De Gelder [2011] NSWLR 594 at [113], QBE Insurance (Australia) Ltd v Miller [2013] NSWCA 442 at [33] and that to succeed in setting aside a proper officers’ decision a party must establish jurisdictional error, a constructive failure to exercise jurisdiction or legal unreasonableness – Craig v State of New South Wales (1995) 184 CLR 163, 179; Minister for Immigration and Citizenship v SZMDS (2010) 240 CLR 611, 645; Minister for Immigration and Citizenship v Li (2013) 249 CLR 332, 363.

Accepting those constraints, it is nevertheless clear that in this case the decision of the Proper Officer must be set aside.

The most obvious basis for this conclusion lies in the Proper Officer’s statements that the clinical notes “are clearly additional relevant information and relate to the accident” and “these records do not appear to contain any new additional relevant information…”. The inconsistency between these statements leads to the conclusion that the Proper Officer did not apply her mind rationally to the information contained in the clinical notes or to the making of her decision considering them. One should recognise the possibility that one of these statements but reflects a change of mind and the presence of the other merely a failure to correct a previous draft of her reasons but the juxtaposition of the two irreconcilable statements makes that conclusion difficult, if not impossible to reconcile with any sensible consideration of the issues.

Support for this view is afforded by El-Kazzi v Allianz Australia Insurance Ltd [2014] NSWSC 927. That also was a case where there was a challenge to a decision of a Proper Officer on an application for a further assessment. In reasons forming part of the decision statements were made, albeit in different paragraphs, that a ‘report, along with the injury to the right shoulder constitutes new additional relevant information” and the report “cannot be considered as additional relevant information”. Justice Hamill held, at [41], that the “irreconcilable statements of opinion as to whether there was (or was not) ‘additional relevant information’ – which is the touchstone of the decision that the proper officer was called upon to make – easily fits” the descriptions of “illogical” and “irrational” and amounted to error justifying the setting aside of the decision.

I should perhaps add that the similarity between the inconsistency of language in this case and the language employed which was the subject of consideration by Hamill J is troubling. Clearly any consideration of an application for a further assessment is likely to inspire reference to terms contained within s 62 of the Motor Accidents Compensation Act and there is no evidence before me that the Proper Officer whose decision made on 20 November 2013 was the subject of consideration in El-Khazzi v Allianz Australia Insurance Ltd was the same person whose decision I am reviewing. However if it was, it suggests most regrettable failings in one tasked with an important role in the workings of the compensation assessment system.

But there is another aspect of the Proper Officer’s decision which would lead me to the conclusion that it should be set aside. The following passage in her reasons contains two fundamental errors:

The statement to the effect that “Dr Tham has not provided any evidence as to how the conclusion that the condition of the shoulder had been resolved” flies in the teeth of the immediately preceding sentence wherein Dr Tham had remarked that Mr Kresan reported “shoulder was almost pain free for the last 4 months following cortisone injection”. It may well be of course that the matter so reported did not justify Dr Tham’s conclusion but to say that he provided no evidence as to how his conclusion was made is to ignore what the doctor had said and so irrational as to demonstrate that no proper decision was made.

The second error in the passage quoted lies in the statement that Dr Tham had provided no evidence as to how his conclusion may have a material effect on the outcome of the previous assessment. Given that the previous assessment concerned the extent of Mr Kresan’s permanent incapacity, Dr Tham’s statement that the condition had resolved had, or was capable of having, so obvious an effect on the outcome of the previous assessment as to make the Proper Officer’s statement about no evidence impossible to understand.

It was also argued that in her reasons the Proper Officer seems to be imposing on Dr Tham some obligation to show that his conclusion would have such a material effect on the outcome of the previous assessment whereas the terms of s 62(3) make it clear that it is to the Proper Officer that that task, or more accurately, the task of deciding whether Dr Tham’s conclusion was capable of having a material effect on the previous assessment fell. Certainly the way in which the passage is expressed provides some support for the contention but an alternate view is that the Proper Officer was merely commenting on what she perceived to be an inadequacy in the evidence, rather than suggesting that there was some onus on Dr Tham to demonstrate the capacity for a material effect. In the last paragraph of her remarks the Proper Officer returns to the capacity of the additional information and records her view on that topic. When the reasons the Proper Officer has given are considered in totality, I am not persuaded that the Proper Officer was imposing on Dr Tham any obligation she bore.

The errors to which I have adverted mean that the Plaintiff has not had its application properly considered and the illogicality or irrationality involved in the errors mean that there has either a constructive failure to exercise her jurisdiction so as to require her decision to be quashed - Minister for Immigration and Multicultural and Indigenous Affairs v SGLB [2004] HCA 32; (2004) 207 ALR 12; (2004) 78 ALJR 992 at [38]. Furthermore, given the nature of the errors made by the Second Defendant, the Plaintiff is entitled to have its application determined by a different Proper Officer.

In its summons the Plaintiff sought costs. In each of the submitting appearances the Defendant opposed the making of a costs order against him or it. During the hearing no attention was given to the question of costs and, in these circumstances, I do not think I should make any decision on that topic at this stage. Accordingly, I propose to reserve it and give liberty to the Plaintiff to apply in that regard on further notice to any of the Defendants against whom the order is sought. The topic should not, however, be allowed to drag on and I will limit the time for giving notice to 14 days.

I make the following orders: