Marks v Secretary, Department of Communities and Justice

1. [1]

   SIMPSON AJ: By summons filed on 8 October 2020, the plaintiff, David Marks, seeks declaratory relief under s 75 of the Supreme Court Act 1970 (NSW) and, pursuant to s 69 thereof, judicial review of a decision of an Appeal Panel constituted under s 328 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (“the WIM Act”) of 14 August 2020. The decision was made on appeal from a medical assessment by an approved medical specialist (“AMS”) under Part 7 of the WIM Act.

2. [2]

   Review under s 69 of the Supreme Court Act is available only in respect of jurisdictional error, or, where the relief sought is an order in the nature of certiorari, error of law on the face of the record.

3. [3]

   Three defendants are named in the summons. They are, respectively, Secretary, Department of Communities and Justice (the plaintiff’s employer); the named members of the Appeal Panel; and the Registrar of the Workers Compensation Commission of NSW (“the Commission”). The second and third defendants have filed submitting appearances. The first defendant is the only active defendant.

4. [4]

   The substantive orders sought are expressed to be:

5. [5]

   The application calls for consideration of certain provisions of the WIM Act, which is to be read in conjunction with the Workers Compensation Act 1987 (NSW) (“the WC Act”, also referred to as “the 1987 Act”). Since the determinations relevant to these proceedings substantial amendments have been made to the legislation: Personal Injury Commission Act 2020 (NSW). References that follow are to the legislation as it existed at the relevant time (but are expressed in the present tense). By s 9 of the WC Act a worker who has suffered injury arising out of or in the course of employment is entitled to compensation in accordance with the WC Act. By s 66 thereof, where the injury results in a degree of permanent impairment greater than 10%, the entitlement extends to compensation in a lump sum calculated in accordance with s 66(2).

6. [6]

   The procedures by which compensation under the WC Act is to be assessed are contained in the WIM Act. Part 7 of Chapter 7 (ss 319-331) deals with “Medical assessment”. Pursuant to s 320, “approved medical specialists” (generally known as “AMS’s”) are appointed for the purposes of Ch 7, Part 7. By s 321 a medical dispute may be referred for assessment under Part 7 by a court, the Commission or the Registrar thereof. By s 319 a “medical dispute” is defined to include a dispute between a claimant and the person on whom the claim is made about the degree of permanent impairment resulting from the injury.

7. [7]

   By s 376 of the WIM Act the State Insurance Regulatory Authority (“the Authority”), constituted under the State Insurance and Care Governance Act 2015 (NSW), may issue (and has issued) guidelines with respect, inter alia, to the assessment of the degree of permanent impairment of an injured worker as a result of an injury.

8. [8]

   Further relevant provisions of the WIM Act are fully set out below.

9. [9]

   The key provisions for present purposes are ss 322(1), 323(1) and 323(4).

10. [10]

    Guidelines issued under s 376 of the WIM Act generally adopt similar guidelines issued by the American Medical Association (AMA5). Relevant NSW Guidelines contain the following:

11. [11]

    In issuing the Guidelines, (at 1.10) the Authority has expressly excluded the application of AMA5 so far as it relates to psychiatric and psychological disorders, and has created its own Guideline which is to be found in Chapter 11. Relevantly, Chapter 11 contains the following provisions:

12. [12]

    Tables 11.1 to 11.6 set out Psychiatric Impairment Rating Scales (PIRS) with respect to six subject matters. These are intended to be, and are, used by AMS’s assessing the degree of permanent impairment of a claimant caused by psychiatric or psychological disorders.

Factual background

1. [13]

   The underlying facts may be stated as follows.

2. [14]

   From 2015 the plaintiff was employed by the first defendant in the Office of the NSW Sheriff. He was subjected to a degree of harassment and vilification that resulted in psychological and/or psychiatric injury. He made a claim for compensation pursuant to s 66 of the WC Act. After initially denying liability for the claim, on 2 October 2018 the first defendant accepted liability. The claim was referred to an AMS, Dr Wasim Shaikh, for assessment of the degree of “whole person impairment” in accordance with s 321 of the WIM Act. (While s 321 speaks of “permanent impairment”, the language used in medical assessments is invariably “whole person impairment” or “WPI”.)

3. [15]

   The first defendant relied on a report by a psychiatrist, Dr Bisht, dated 2 July 2019, who considered that the assessment should not proceed because, in his opinion, the plaintiff had not achieved maximum medical improvement (see Guidelines, 1.6a extracted at [10] above). The assessment nevertheless proceeded. No issue was raised as to any pre-existing condition or impairment that would justify deduction from the assessed degree of impairment under s 323 of the WIM Act.

4. [16]

   Although it has limited bearing on the issues raised in the present application, in the interests of completeness reference should be made to the material presented to AMS Shaikh. There are some puzzling features in that material. Since the primary material is not in the papers presented to this Court, the following is drawn from the Statement of Reasons of the Appeal Panel the subject of this application.

5. [17]

   The plaintiff provided a statement of 27 July 2018 and a supplementary statement of 17 March 2019. In the first, he stated that, prior to his employment by the first defendant, he had been a retained fireman employed by “Fire Rescue NSW”. He made no mention of previous employment in the NSW Police Force which, as will be seen below, is of some considerable relevance. The plaintiff did disclose in his first statement that he had, about ten years previously, suffered post traumatic stress disorder (“PTSD”), which had abated. He said that, by reason of a confidentiality agreement, he was precluded from speaking about the circumstances of the injury that gave rise to that condition, or his employer at the time. In the supplementary statement of 17 March 2019 the plaintiff emphasised that the condition had resolved and was “completely irrelevant” to the condition for which he was seeking compensation. He again said that he was not at liberty to discuss the details of the previous condition “due to a gag order”. He noted that prior to commencing employment with the first defendant he had been required to complete rigorous psychological testing.

6. [18]

   Also before AMS Shaikh were a number of medical reports. One such report was provided on behalf of the plaintiff, for medico legal purposes, by Associate Professor Michael Robertson who also recorded a previous history of PTSD, although that was said to have been in 2001. Associate Professor Robertson expressed the opinion:

7. [19]

   There was also a report of 17 May 2018 from the plaintiff’s then treating psychiatrist, Dr Nagesh. Dr Nagesh diagnosed depressive and anxiety symptoms for the preceding three years:

8. [20]

   Dr Nagesh recorded a history of PTSD 17 years earlier. Clinical notes from Dr Nagesh of 17 May 2018 recorded:

9. [21]

   On 23 October 2019 AMS Shaikh examined the plaintiff. He provided a medical assessment certificate (“MAC”) on 24 October. He diagnosed the plaintiff as suffering from “major depressive disorder”. AMS Shaikh assessed the plaintiff’s degree of whole person impairment at 19%. He noted that the plaintiff had previously suffered from PTSD “from witnessing a traumatic event in the past” but also noted that, although the plaintiff had “had a couple of sessions” with a psychiatrist, he had not received any treatment in the years preceding the incidents that gave rise to the injury the subject of the assessment.

10. [22]

    AMS Shaikh considered that the plaintiff’s treatment in respect of the depressive illness had led to an improvement in his mental health and to a significant reduction in impairment. In recognition of “the treatment effect”, for which cl 1.32 of the Guidelines (see [10] above) provides, he added 2% to the assessment, and found a total permanent impairment of 21%. He declined to make any deduction under s 323(1) representing any contribution to the impairment made by a pre-existing condition. In answer to a specific question whether any proportion of the whole person impairment was due to a previous injury, pre-existing condition or abnormality he answered:

11. [23]

    Pursuant to s 329(1)(a) of the WIM Act the first defendant sought a referral for further medical assessment. The basis for the application was the failure of another employer and another insurer to comply with directions for production of documents evidencing an earlier claim by the plaintiff for compensation for psychiatric injury. (This was the PTSD to which AMS Shaikh expressly referred). On 10 January 2020, a delegate of the Registrar referred the matter to AMS Shaikh for further assessment.

12. [24]

    Additional material was provided. That material showed that, in 2011, the plaintiff had made a similar claim for compensation arising out of his service with the NSW Police Force. He had been (or perceived that he had been) threatened with a gun by a colleague. In 2011 an AMS, Dr Lana Kossoff, diagnosed the plaintiff as suffering from PTSD and assessed his degree of permanent impairment at 22%. AMS Kossoff considered then that the plaintiff’s condition had become chronic and was unlikely to remit or significantly improve, despite further treatment.

13. [25]

    The plaintiff provided a further statement, dated 31 January 2020. As recorded by the Appeal Panel, he said that when he began work with the first defendant:

14. [26]

    The first defendant contended to AMS Shaikh that a deduction pursuant to s 323(1) representing the proportion of the plaintiff’s permanent impairment attributable to the earlier condition should be made from the assessed level of permanent impairment.

15. [27]

    On 14 April 2020 having reviewed the materials again, including the additional material, AMS Shaikh issued a second MAC. He certified:

16. [28]

    Pursuant to s 327 of the WIM Act the first defendant appealed. As mentioned above, by s 327(3) the available grounds for appeal are limited to those set out in that subsection. The sole ground of appeal invoked by the first defendant was stated to be:

17. [29]

    The asserted error was particularised in submissions provided to the Appeal Panel as:

18. [30]

    The submissions quoted extensively from the findings of AMS Kossoff, and included the following:

19. [31]

    There was no challenge to the allowance by AMS Shaikh of an additional 2% representing “the treatment effect”.

The decision of the Appeal Panel

1. [32]

   The Appeal Panel found demonstrable error in the approach of the AMS, largely by what it perceived as a failure by AMS Shaikh to give adequate reasons in a number of respects for the approach he took to the s 323(1) question (see Statement of Reasons at [96], [107], [110], [115]). It considered that the failure of AMS Shaikh to refer specifically to the documentation relevant to the earlier diagnosis of PTSD was indicative of failure to consider the content of that documentation (at [116]).

2. [33]

   Additionally, the Appeal Panel considered (at [105]) that the AMS applied the “wrong test” by considering that the fact that the plaintiff was asymptomatic prior to the injury in question was “determinative” of whether any s 323(1) deduction should be made. Pursuant to s 328(5) of the WIM Act the Appeal Panel revoked the MAC, proceeded to its own assessment of whole person impairment and issued a new certificate. It adopted AMS Shaikh’s assessment of 19%, but:

3. [34]

   The Appeal Panel regarded the history of harassment and vilification during the plaintiff’s employment in the Office of the Sheriff as “the cause of [his] decompensation” ([111]). However, it also considered that the similarity of “the two causes of [his] PTSD” was “of some moment”, and that subsequent decompensation was contributed to by his earlier experience while serving in the Police Force. It was for that reason that it reduced the assessment of whole person impairment of 19% by 25%, yielding an ultimate assessment of 14%.

4. [35]

   The Appeal Panel rejected a submission made on behalf of the plaintiff that the question of deduction under s 323(1) was to be determined by reference to Guideline 11.10. It relied on, and extracted passages from, a decision of an earlier Appeal Panel, constituted by the same Arbitrator and one of the approved medical specialists who constituted the Appeal Panel in the present case, which had expressly declined to apply Guideline 11.10 (Broad-spectrum (Australia) Pty Ltd v Wills [2019] NSW WCC MA 13). In that case the Appeal Panel explained its reasoning as follows:

5. [36]

   Although, in the present case, the Appeal Panel did not expressly state its intention to decline to apply Guideline 11.10, it is apparent that it did so. It said:

6. [37]

   In reasoning to its conclusion that the MAC should be revoked the Appeal Panel said:

7. [38]

   With respect to the “treatment effect” the Appeal Panel held (at [129]) that this “modifier” is only available where there has been effective long-term treatment that has resulted in “apparent substantial or total elimination” of the relevant impairment, and that the plaintiff had achieved neither. It declined, in its reassessment, to make a similar increment.

The application for judicial review

1. [39]

   Neither the summons nor the plaintiff’s written submissions clearly identified the basis of jurisdiction invoked. The relief sought includes an order in the nature of certiorari. As indicated above, relief under s 69 is available for jurisdictional error or error of law on the face of the record.

2. [40]

   No ground expressly challenged the conclusions of the Appeal Panel that the AMS failed to give adequate reasons for some of his conclusions. While, in the absence of argument to the contrary, I would accept that failure by an AMS to give adequate reasons for an assessment could constitute “demonstrable error” within the meaning of s 327(3)(d), and would therefore justify the Appeal Panel proceeding to make its own assessment (s 328(5)), the real issue in the present application is whether the Appeal Panel was correct in its identification of the relevant error (on the part of AMS Shaikh) as the application of the wrong test. If, in revoking AMS Shaikh’s certificate and issuing a new certificate, the Appeal Panel itself applied a wrong test, it was in jurisdictional error.

3. [41]

   Only two issues emerged on the hearing of the application:

4. [42]

   The plaintiff’s attack on the decision of the Appeal Panel focused principally on its reliance on the extracted passages from the reasons in Wills, and its refusal (at [87]) to apply Guideline 11.10 of Chapter 11 of the Guidelines.

5. [43]

   The Appeal Panel drew support for its approach to Guideline 11.10 from two decisions of this Court which it considered endorsed the approach taken in Wills. In Ms Wills’ case the employer was twice dissatisfied with determinations of the Appeal Panel and sought judicial review in this Court: see Broadspectrum (Australia) Pty Ltd v Fiona Louise Wills [2018] NSWSC 1320, per Harrison AsJ; Broadspectrum (Australia) Pty Ltd v Wills [2019] NSWSC 1797, per Meagher J. In neither of those cases was any issue raised as to the correctness of the extracted passages. Meagher J made specific reference to that circumstance, saying:

6. [44]

   Nor did the Appeal Panel state any source of the “principles” to which it referred in [58] of Wills. It is likely, however, that those sources include decisions such as Cole v Wenaline Pty Ltd [2010] NSWSC 78 (“Cole”) and Elcheikh v Diamond Formwork (NSW) Pty Ltd (in Liquidation) [2013] NSWSC 365 (“Elcheikh”). In Cole Schmidt J said of s 323:

7. [45]

   In an earlier decision (Mathew Hall Pty Ltd v Smart [2000] NSWCA 284, concerning a relevantly similar provision of the WC Act, to which Schmidt J referred) the Court of Appeal said:

8. [46]

   In Elcheikh Schmidt J repeated the observations she had made in Cole, and (at [91]) accepted that the fact the pre-existing condition had been asymptomatic did not preclude its contributing to the impairment being assessed. Her Honour went on to observe (at [95]) that an asymptomatic condition may or may not contribute to a resulting impairment.

9. [47]

   There is an important distinction to be drawn between these cases and the present case. In both Cole and Elcheikh the injury concerned was physical, and therefore one to which the AMA5 Guides, adopted by the s 376 Guidelines, were applicable. Guideline 11.10 had no application. The relevant Guideline was 1.28.

10. [48]

    The reasoning in [58] and [59] of Wills is not entirely easy to follow. The Appeal Panel appears to interpret s 323(1) as dictating a sequence, or a series of four steps, to be taken in the determination of whether any deduction should be made. According to the Appeal Panel, the sequence required by s323(1) is:

11. [49]

    The Appeal Panel considered that, by contrast, application of Guideline 11.10 dictates a different sequence, being:

12. [50]

    On that basis, according to the Appeal Panel, an earlier injury, condition or abnormality that was asymptomatic immediately prior to the injury in question could not be taken into account for the purposes of the s 323(1) assessment. That, presumably, results from the requirement to begin by assessing the claimant’s “pre-injury level of functioning”; if the claimant is asymptomatic, there is no “pre-injury impairment” to assess, and nothing to subtract from the current, or, post-injury, level of impairment.

13. [51]

    That would deny the relevance of any contribution that might be made by a pre-existing, but dormant, condition that, for example, rendered the claimant more vulnerable to the injury that precipitated the impairment under assessment.

14. [52]

    The stated reason of the Appeal Panel for declining to apply Guideline 11.10 was that to do so would produce an “anomalous” result. As I understand the Reasons, that is because it would exclude consideration of any contribution made to the plaintiff’s current impairment by his previous (but at the time of his employment with the first defendant asymptomatic) psychiatric or psychological condition. That, the Appeal Panel considered, would not produce a result in accordance with s 323(1); neither s 323(1) nor the various decisions with respect thereto requires that a pre-existing condition or abnormality be symptomatic at, or immediately before, the time of the injury caused by the workplace injury.

15. [53]

    It is apparent from the extracts of the Reasons set out in [37] above that the Appeal Panel considered that notwithstanding the plaintiff’s asymptomatic status at the time of his employment with the first defendant, he was nevertheless, by reason of his earlier experience of PTSD, rendered more vulnerable to the subsequent harassment and vilification such that the earlier condition was “a significant factor” in the assessment of the extent to which his current condition was caused by the events while he was an employee of the first defendant. To take that vulnerability into account in the assessment of permanent impairment caused by the injury suffered in the defendant’s employ would, on the Appeal Panel’s reasoning, be entirely consistent with s 323(1) but not in accordance with Guideline 11.10.

16. [54]

    The argument advanced against the conclusions of the Appeal Panel on behalf of the plaintiff was disarmingly simple. It was that s 322(1) is unequivocal in requiring the AMS (and the Appeal Panel) to assess the degree of permanent impairment in accordance with Guideline 11.10. So much, it was contended, was the inevitable consequence of the requirement in s 322(1) that the assessment “is to be made” in accordance with the Guidelines, reinforced by s 323(4) empowering the Authority to make specific Guidelines for the determination of any deduction to be made under s 323(1). That left no room for the Appeal Panel to decline to apply Guideline 11.10 because of what it perceived to an anomalous outcome.

17. [55]

    The response made on behalf of the first defendant was equally simple. It was, as expressed in written submissions:

18. [56]

    Buried in these submissions, and not addressed by either party, is what I consider to be an important underlying issue, and possibly the key to the approach taken by the Appeal Panel. One way of understanding the reasoning of the Appeal Panel, it seems to me, is that it took the course it did (in both Wills and in the present case) because it considered that Guideline 11.10 is inconsistent with s 323(1). That could, at least potentially, raise an issue as to the validity of Guideline 11.10. Two questions arise:

19. [57]

    As to the second question the decision of the Court of Appeal in Henderson v QBE Insurance (Australia) Ltd [2013] NSWCA 480 (“Henderson”) needs to be considered. That was a decision with respect to the Motor Accidents Compensation Act 1999 (NSW) (“MAC Act”) which established a procedure for the medical assessment of injuries suffered in motor accidents, and, by s 44, permitted the relevant authority to issue Guidelines with respect to the assessment of the degree of permanent impairment of a person so injured. A clear discrepancy was discernible between a statutory provision and a clause in the Guidelines. Section 62 permitted a second (or subsequent) referral for assessment on the grounds of the deterioration of the injury or additional relevant information about the injury but only (by s 62(1A)), where the deterioration or additional information is such as to be capable of having a material effect on the outcome of the previous assessment. By contrast, the relevant Guideline provided:

20. [58]

    Of that discrepancy Beazley P (with whom Tobias AJA agreed) said:

21. [59]

    Meagher JA, while noting the discrepancy, did not comment because it was not, on the facts of that case, significant. That was because the statutory test had, in fact, been applied. Since, as both Beazley P and Meagher JA noted, the inconsistency in that case was of no significance, the observation of Beazley P is obiter. Moreover, and no doubt because of the insignificance of the discrepancy, her Honour did not refer to s 133(2) of the MAC Act which provided:

22. [60]

    It is possible, as the Appeal Panel apparently considered, that Guideline 11.10 does not accurately reflect what was contemplated by the legislature in enacting s 323(1), which does not depend upon pre-injury level of functioning, but encompasses (or potentially encompasses) pre-existing causal factors that are not, at the time of assessment, operative to produce symptoms, but may nevertheless contribute to the overall impairment (see Cole and Elcheikh). If that is so, a question arises, or might arise, as to whether Guideline 11.10 is beyond power.

23. [61]

    On one view it is not possible to escape the plain language of the relevant legislation. Sections 376 and 323(4) respectively empower the Authority to issue Guidelines with respect, inter alia, to the assessment of permanent impairment, and to the determination of the deduction required by s 323(1). As the plaintiff emphatically pointed out, s 322(1) states, unequivocally, that the assessment of permanent impairment is to be made in accordance with those Guidelines. On that view, if Guideline 11.10 is, as is perceived by the Appeal Panel, “at odds” with what the legislature had in mind in the formulation of s 323(1), it is the Guideline that is to be applied. Moreover, the Authority has made a deliberate and considered decision, authorised by the legislation, to exclude the application of AMA5 (including Guideline 1.28) from the assessment of psychiatric and psychological conditions, and has crafted its own Guideline.

24. [62]

    On that view the decision of the Appeal Panel evidenced both jurisdictional error (by the Appeal Panel directing its attention to the wrong question) and error of law of the face of the record (by the misconstruction of the relevant legislation).

25. [63]

    On an alternative view, the Guidelines must be seen as subservient to the legislation. If Guideline 11.10 is, as the Appeal Panel appears to consider, inconsistent with s 323(1): see also Frost v Kourouche [2014] NSWCA 39 at [45], it must, as Beazley P held in Henderson, give way to the statute.

26. [64]

    The proposition that a Guideline that is inconsistent with a statutory provision can nevertheless take effect is difficult to countenance. True it is that s 376 does not have the proviso, common in provisions authorising delegated legislation, that the delegated legislation be “not inconsistent with” the authorising Act. Nevertheless, the issue of a guideline that is inconsistent with any provision of the authorising statute is unlikely to survive challenge.

27. [65]

    These questions have not been debated in the present case. They are of some importance. I propose to give the parties the opportunity to make submissions as to:

28. [66]

    It is then possible to consider briefly the second aspect of the application, the refusal of the Appeal Panel to make any allowance for “the treatment effect”. As indicated above, the allowance made by AMS Shaikh was not the subject of any challenge in the appeal to the Appeal Panel and no notice was given to the plaintiff that it might be disturbed. The complaint now made is that there was a denial of procedural fairness in the Appeal Panel proceeding to make its assessment without either incorporating such an allowance, or, at least, giving the plaintiff an opportunity to be heard in that respect.

29. [67]

    In my opinion this complaint is made good. While it is open to the Appeal Panel to consider additional grounds of appeal to those notified, that can only be done in compliance with the rules of procedural fairness: see, eg, Siddik v WorkCover Authority of NSW [2008] NSWCA 116 at [101].

30. [68]

    It may be that the approach taken by the Appeal Panel was correct; however, the plaintiff had the benefit of a finding, or assessment, by the AMS and there was no indication to him that he would not continue to have that benefit or that it would be challenged. He was not given the opportunity to be heard on the question.

31. [69]

    In those circumstances I accept that the plaintiff was denied procedural fairness. Jurisdictional error in this respect has been established.

32. [70]

    That raises the difficult question of what orders ought to be made. As indicated above the orders sought include an order that the decision be set aside and the matter be remitted to the second defendant (the Appeal Panel) and/or the third defendant (the Registrar) to be determined according to law. With respect to the allowance for “the treatment effect”, such an order is appropriate, to give the plaintiff an opportunity to be heard.

33. [71]

    The only order I make at this stage is that the matter is stood over for further hearing on a date to be fixed.

34. [72]

    I direct each party to provide any submissions with respect to the questions stated in [65] above on or before 16 April 2021, and any response to the submissions of the other party on or before 30 April 2021.