Allianz Australia Insurance Limited v Bennett

[2020] NSWSC 825

Supreme Court

New South Wales

Medium Neutral Citation:

Allianz Australia Insurance Limited v Bennett [2020] NSWSC 825

Hearing dates:

23 April 2020

Date of orders:

29 June 2020

Decision date:

29 June 2020

Jurisdiction:

Common Law

Before:

Harrison AsJ

Decision:

The Court declares that:

(1) The certificate and reasons of the review panel dated 9 September 2019 as it relates to findings on whole person impairment arising from the accident on 29 August 2019 is vitiated by an error of law and jurisdictional error.

The Court makes an order:

(2) In the nature of certiorari removing into the Court the certificate and reasons of the review panel dated 9 September 2019 as it relates to findings on whole person impairment and quashing that certificate.

The Court further orders that:

(3) The matter is remitted to the State Insurance Regulatory Authority to be determined according to law.

(4) The first defendant is to pay the plaintiff’s costs on an ordinary basis.

Catchwords:

ADMINISTRATIVE LAW – Judicial review – State Insurance Regulatory Authority – Review of a certificate of a review panel –Failure to properly apply cl 1.34 of the Motor Accident Permanent Impairment Guidelines – Whether dementia is a physical or psychological injury for the purposes of assessing impairment

Legislation Cited:

1.5, 1.6, 1.7, 1.21, 1.32, 1.33, 1.34, 1.35, 1.36, 1.37, 1.213

Motor Accident Permanent Impairment Guidelines, cls

Motor Accidents Compensation Act 1999 (NSW), ss 44, 58, 61, 63, 131, 133

Supreme Court Act 1970 (NSW), s 69

Cases Cited:

Allianz Australia Insurance Ltd v Cervantes (2012) 61 MVR 443

Allianz Australia Insurance Ltd v Larriera [2016] NSWSC 441

Allianz Australia Insurance Ltd v Rutland [2015] NSWCA 328

Boyce v Allianz Australia Insurance Ltd (2018) 96 NSWLR 356; [2018] NSWCA 22

DNM Mining Ply Ltd v Barwick [2004] NSWCA 137

Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 197 ALR 389; 77 ALJR 1088; [2003] HCA 26

GIO General v Smith & Ors; Insurance Australia t/as NRMA Insurance v Smith & Ors [2011] NSWSC 802

Jobling v Associated Dairies [1982] AC 794

K-Mart Australia Ltd v McCann [2004] NSWCA 283

Richardson bht Richardson v QBE Insurance (Australia) Ltd [2020] NSWSC 366

Rodger v De Gelder (2015) 71 MVR 514

Smith v Insurance Australia [2018] NSWSC 1606

Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; 303 ALR 64

Category:

Principal judgment

Parties:

Allianz Australia Insurance Limited (Plaintiff)
Ian Bennett (First Defendant)
State Insurance Regulatory Authority (Second Defendant)
Wayne Mason, Michael Diamond and Peter Wallace in their capacity as medical assessors of SIRA, comprising the Medical Assessors Review Panel appointed by SIRA (Third Defendant)

Representation:

Counsel:
K Rewell SC with J Gumbert (Plaintiff)
J Turnbull SC with M Cleary (First Defendant)

Solicitors:
Holman Webb Lawyers (Plaintiff)
Gerard Malouf & Partners (First Defendant)
Submitting Appearances, Crown Solicitor (Second & Third Defendants)

File Number(s):

2019/354022

Publication restriction:

Nil

Judgment

1. HER HONOUR: This is a judicial review of the review panel of the State Insurance Regulatory Authority (“SIRA”). By summons filed 11 November 2019, the plaintiff seeks firstly, an order in the nature of certiorari or, alternatively, a declaration setting aside or declaring invalid the decision and/or medical assessment and review panel certificate dated 9 September 2019 made purportedly pursuant to ss 63 and 61 of the Motor Accidents Compensation Act 1999 (NSW) (“the review panel decision”); and secondly, an order in the nature of mandamus remitting the matters the subject of the review panel decision and certificate to SIRA for reallocation of the matter to a differently constituted review panel for determination according to law.

2. The plaintiff is Allianz Australia Insurance Limited (“the insurer”). The first defendant is Ian Bennett. The second defendant is SIRA. The third defendant is the review panel of medical assessors comprising of psychiatrists Wayne Mason, Michael Diamond and Peter Wallace Anderson in their capacities as medical assessors of SIRA (“the review panel”). The second and third defendants have filed submitting appearances. The insurer relied on the affidavit of its solicitor, John Mallos, dated 23 December 2019. The first defendant relied on the affidavit of his solicitor, Rita Furfaro, dated 18 February 2020.

Background

3. On 29 August 2019, the first defendant was injured in a motor vehicle accident in New South Wales (“the accident”). The insurer is the compulsory third party insurer of the vehicle at fault in the accident.

4. As the first defendant’s entitlement to damages for non-economic loss pursuant to s 131 of the Motor Accidents Compensation Act 1999 (NSW) (“the MAC Act”) was in dispute, a medical assessment of his degree of permanent impairment was required to determine whether his whole person impairment (“WPI”) exceeded 10%.

5. The first defendant made an application to the Medical Assessment Service (“MAS”) for assessment of his WPI pursuant to s 58(1)(d) of the MAC Act. The first defendant alleged that he sustained a number of injuries as a result of the accident, including psychological injuries.

6. The first defendant was assessed by medical assessor Patrick Morris (“the medical assessor”). On 31 March 2019, the medical assessor determined that the first defendant suffered from Post-Traumatic Stress Disorder (“PTSD”) and Major Depressive Disorder, giving rise to a WPI of 13%.

7. On 23 April 2019, the insurer applied for a review of the assessment of the medical assessor pursuant to s 63 of the MAC Act. The insurer’s application for review was made on the grounds that the medical assessor had used an incorrect methodology to calculate the first defendant’s WPI, and was accompanied by detailed written submissions. The proper officer of the MAS granted the review and allocated the matter to the review panel.

8. On 28 August 2019, the review panel conducted a medical review.

9. On 9 September 2019, the review panel issued its decision. In it, the review panel determined that the first defendant suffered from PTSD, Major Depressive Disorder, anxiety and depression caused by the accident. This aspect of the review panel’s assessment is not challenged in these proceedings.

10. The review panel further found that the first defendant suffered from an unrelated dementia condition that arose at some point after the accident, and which was also associated with cognitive impairment. The review panel assessed the first defendant’s WPI caused by the accident at 19%.

11. It is not in dispute that the first defendant suffers from dementia. What is in dispute is whether the review panel erred in its assessment by failing to separately calculate the first defendant’s impairment regarding his dementia.

Statutory framework

12. Section 44(1)(c) of the MAC Act reads:

“44 Medical Guidelines of Authority

(1) The Authority may issue guidelines (Motor Accidents Medical Guidelines) with respect to the following:

…

(c) the assessment of the degree of permanent impairment of an injured person as a result of an injury caused by a motor accident,”

13. The provisions setting out the procedures in relation to medical assessments are contained in Part 3.4 of the MAC Act. Section 58 reads:

“58 Application

(1) This Part applies to a disagreement between a claimant and an insurer about any of the following matters (referred to in this Part as medical assessment matters):

…

(d) 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%.

…”

14. Section 61 of the MAC Act sets out the status of medical assessments. It relevantly reads:

“61 Status of medical assessments

(1) The medical assessor or assessors to whom a medical dispute is referred is or are to give a certificate as to the matters referred for assessment.

(2) Any such certificate as to a medical assessment matter is conclusive evidence as to the matters certified in any court proceedings or in any assessment by a claims assessor in respect of the claim concerned.

…

(4) Any such certificate as to a medical assessment matter is conclusive evidence as to the matters certified in any court proceedings or in any assessment by a claims assessor in respect of the claim concerned.

…

(9) A certificate is to set out the reasons for any finding by the medical assessor or assessors as to any matter certified in the certificate in respect of which the certificate is conclusive evidence.

…”

15. Section 63 of the MAC Act provides for a review of a medical assessment by a review panel. It relevantly reads:

“63 Review of medical assessment by review panel

(1) A party to a medical dispute may apply to the proper officer of the Authority to refer a medical assessment under this Part by a single medical assessor to a review panel of medical assessors for review.

(2) An application for the referral of a medical assessment to a review panel may only be made on the grounds that the assessment was incorrect in a material respect.

(2A) …

(3) The proper officer of the Authority is to arrange for any such application to be referred to a panel of at least 3 medical assessors, but only if the proper officer is satisfied that there is reasonable cause to suspect that the medical assessment was incorrect in a material respect having regard to the particulars set out in the application.

(3A) The review of a medical assessment is not limited to a review only of that aspect of the assessment that is alleged to be incorrect and is to be by way of a new assessment of all the matters with which the medical assessment is concerned.

(4) The review panel may confirm the certificate of assessment of the single medical assessor, or revoke that certificate and issue a new certificate as to the matters concerned.

(5) …

(6) Section 61 applies to any new certificate or new combined certificate issued under this section.”

16. Under s 133 of the MAC Act, the assessment of the degree of permanent impairment must be expressed as a percentage and must be made in accordance with the Motor Accidents Medical Guidelines.

17. Under s 131 of the MAC Act, damages may only be awarded for non-economic loss if the degree of permanent impairment as the result of the injury caused by the motor accident is greater than 10%.

The guidelines for the assessment of the degree of permanent impairment

18. SIRA has issued Motor Accident Permanent Impairment Guidelines (“the Permanent Impairment Guidelines”) for assessing the degree of permanent impairment arising from motor accident injuries. The edition of the Permanent Impairment Guidelines relevant to this determination was issued in 2018.

19. In Boyce v Allianz Australia Insurance Ltd (2018) 96 NSWLR 356; [2018] NSWCA 22 (“Boyce”) the Court of Appeal held that a failure to comply with the Permanent Impairment Guidelines can constitute a constructive failure to exercise jurisdiction: see Boyce at [9], [14] to [22], [41], [44], [49] to [51], [66] per Basten JA (Macfarlan JA agreeing) and at [108] per Sackville AJA.

20. Clauses 1.1 and 1.2 of the Permanent Impairment Guidelines state:

“1.1 These Motor Accident Permanent Impairment Guidelines have been developed for the purpose of assessing the degree of permanent impairment arising from the injury caused by a motor accident, in accordance with Section 133(2)(a) of the Motor Accidents Compensation Act 1999 (NSW) (the Act).

1.2   These Guidelines are based on the American Medical Association’s Guides to the Evaluation of Permanent Impairment, Fourth Edition (third printing, 1995) (AMA4 Guides). However, there are some very significant departures from that document in these Guidelines. A medical assessor undertaking impairment assessments for the purposes of the Act must read these Guidelines in conjunction with the AMA4 Guides. These Guidelines are definitive with regard to the matters they address. Where they are silent on an issue, the AMA4 Guides should be followed. In particular, chapters 1 and 2 of the AMA4 Guides should be read carefully in conjunction with clauses 1.1 to 1.46 of these Guidelines. Some of the examples in the AMA4 Guides are not valid for the assessment of impairment under the Act. It may be helpful for medical assessors to mark their working copy of the AMA4 Guides with the changes required by these Guidelines.” (Emphasis added)

21. Clauses 1.5-1.7 of the Permanent Impairment Guidelines concern causation. They read:

“1.5 An assessment of the degree of permanent impairment is a medical assessment matter under Section 58 (1)(d) of the Act. The assessment must determine the degree of permanent impairment of the injured person as a result of the injury caused by the motor accident. A determination as to whether the injured person’s impairment is related to the accident in question is therefore implied in all such assessments. Medical assessors must be aware of the relevant provisions of the AMA4 Guides, as well as the common law principles that would be applied by a court (or claims assessor) in considering such issues. State Insurance Regulatory Authority 7

1.6   Causation is defined in the Glossary at page 316 of the AMA4 Guides as follows:

‘Causation means that a physical, chemical or biologic factor contributed to the occurrence of a medical condition. To decide that a factor alleged to have caused or contributed to the occurrence or worsening of a medical condition has, in fact, done so, it is necessary to verify both of the following:

1.    The alleged factor could have caused or contributed to worsening of the impairment, which is a medical determination.

2.    The alleged factor did cause or contribute to worsening of the impairment, which is a non-medical determination.’

This, therefore, involved a medical decision and a non-medical informed judgment.

1.7   There is no simple common test of causation that is applicable to all cases, but the accepted approach involves determining whether the injury (and the associated impairment) was caused or materially contributed to by the motor accident. The motor accident does not have to be a sole cause as long as it is a contributing cause, which is more than negligible. Considering the question ‘Would this injury (or impairment) have occurred if not for the accident?’ may be useful in some cases, although this is not a definitive test and may be inapplicable in circumstances where there are multiple contributing causes.”

22. Clause 1.21 of the Permanent Impairment Guidelines states:

“1.21   The evaluation should only consider the impairment as it is at the time of the assessment.”

23. Clauses 1.24 and 1.32-1.33 of the Permanent Impairment Guidelines provide:

“1.24   A condition may present that is not covered in these Guidelines or the AMA4 Guides. If objective clinical findings of such a condition are present, indicating the presence of an impairment, then assessment by analogy to a similar condition is appropriate. The medical assessor must include the rationale for the methodology chosen in the impairment evaluation report.

…

1.32   The capacity of a medical assessor to determine a change in physical impairment will depend upon the reliability of clinical information on the pre-existing condition. To quote the AMA4 Guides (page 10): ‘For example, in apportioning a spine impairment, first the current spine impairment would be estimated, and then impairment from any pre-existing spine problem would be estimated. The estimate for the pre-existing impairment would be subtracted from that for the present impairment to account for the effects of the former. Using this approach to apportionment would require accurate information and data on both impairments.’ Refer to clause 1.218 for the approach to a pre-existing psychiatric impairment.

1.33   Pre-existing impairments should not be assessed if they are unrelated or not relevant to the impairment arising from the motor accident.”

24. Clauses 1.34, 1.35 to 1.37 and 1.213 of the Permanent Impairment Guidelines provide:

“Subsequent injuries

1.34   The evaluation of permanent impairment may be complicated by the presence of an impairment in the same region that has occurred subsequent to the relevant motor accident. If there is objective evidence of a subsequent and unrelated injury or condition resulting in permanent impairment in the same region, its value should be calculated. The permanent impairment resulting from the relevant motor accident must be calculated. If there is no objective evidence of the subsequent impairment, its possible presence should be ignored.

Psychiatric impairment

1.35   Psychiatric impairment is assessed in accordance with ‘Mental and behavioural disorders’ within these Guidelines.

1.36   Impairment resulting from a physical injury must be assessed separately from the impairment resulting from a psychiatric or psychological injury.

1.37   When determining whether the degree of permanent impairment of the injured person resulting from the motor accident is greater than 10%, the impairment rating for a physical injury cannot be combined with the impairment rating for a psychiatric or psychological injury.

…

Assessment of mental and behavioural disorders

1.213   The impairment must be attributable to a psychiatric diagnosis recognised by the current edition of the Diagnostic & Statistical Manual of Mental Disorders (DSM) or the current edition of the International Statistical Classification of Diseases & Related Health Problems (ICD). The impairment evaluation report must specify the diagnostic criteria on which the diagnosis is based.”

The review panel decision

25. On 28 August 2019, two assessors from the review panel re-examined the first defendant in order to assess his psychiatric impairment as a result of the accident.

26. Under the heading “Presentation and Findings on Examination”, the review panel stated:

“[The first defendant] was seen with his daughter at all times. He had travelled with her assistance by plane to Sydney. He was reasonably oriented, able to give the location, the day, the month, the year. He was quite close to the correct date. He was not agitated. He was able to engage quite reasonably in the interview process and he was able to maintain that engagement in what was a structured interview, quite directive, for two hours.

…

He was unshaven and said he had shaved two days previously. He was otherwise not disheveled. He was quite neat without signs of self-neglect. His hair was lengthy but that was his choice. He did not look ungroomed.

He followed questions. He has a hearing impediment and asked for some repeats because he could not hear. His concentration was reasonably adequate to the prolonged and directive interview situation.

He looked very tired. His mood was reportedly low. He did not appear irritable with the interview process. He said it was a difficult experience.

He had not taken analgesic medication, on the express advice of others, prior to the interview, and he was in some pain. Nevertheless he was reasonably pleasant, agreeable and uncomplaining. He did not have much word finding difficulty. He had some difficulty recalling names of relevant personnel like doctors and others.

He gave a very clear account of hyperarousal symptoms, avoidance symptoms and re-experiencing symptoms.”

27. Under the heading “Panel Deliberations”, the review panel stated:

“On the basis of some of the documentation reviewed, the panel had expected that his current presentation would be dominated by a dementing illness, but that was not so. The Panel did come to the view that he had some degree of dementia but did not find that it dominated the clinical picture.

On the other hand it did influence his current functioning, particularly some aspects of self-care and his functioning with regard to memory.

…

The panel agrees with Assessor Morris about the need to apportion for pre-accident impairment but has come to a different impairment rating when so apportioning.

The panel adopted a different methodology for assessing impairment caused by the accident. That methodology was to assess current whole person impairment caused by psychiatric injury, while excluding from the mind the effects of the painful disabling condition or any dementia or any other problem.” (Emphasis added)

28. Under the Permanent Impairment Guidelines, behavioural consequences of a psychiatric condition are assessed according to the Psychiatric Impairment Rating Scale (“PIRS”). Each of the six categories on the PIRS evaluates an area of functional impairment. The three categories relevant to this judicial review are “Self care and personal hygiene”, “Concentration, persistence and pace” and “Adaptation”.

29. In a table addressing current impairment, the review panel assessed the first defendant on the PIRS relevantly as follows:

Psychiatric diagnoses	• Posttraumatic Stress Disorder • Major Depressive Disorder
…	…	…
Category	Class	Reason for decision
Self care and personal hygiene	3	The Panel thought it obvious that the claimant is unable to live alone because of the totality of his impairments. Some of these come from physical injury, some from dementia, and some from psychiatric injury. The Panel considered that the psychiatric injury alone was highly significant and undertreated, and alone gave rise to a loss of motivation, energy and drive. He suffered impairment resulting from a lack of interest in maintaining self care and preserving his independence. Excluding the effects of physical injury and dementia, the Panel considered there was a moderate impairment in this domain of functioning because he was not able to live independently because of the psychiatric disorders diagnosed and attributed to the subject accident.
…	…	…
Concentration, persistence and pace	2	The claimant receives some assistance in financial management, management of his affairs generally, and some assistance with medication from his daughter. This is to a large extent due to a dementia which is not related to the accident. He is able to use a computer to a limited extent, emails and googling. He was able to attend in the interview situation and to persist with the interview situation. He experienced hyperarousal symptoms in the aftermath of the accident related to PTSD. There is fatigue related to major depressive disorder. On the available information the Panel considered there is a mild impairment in this domain of functioning caused by psychiatric injury alone.
Adaptation	3	He is now on a disability support pension because of the totality of his medical conditions and he is requiring live-in assistance at home. He is not engaged in any community roles. A significant degree of his severe or total impairment in this domain stems from dementing illness, hearing impediment and a painful physical condition. The Panel considered that the psychiatric injury alone gave rise to a moderate impairment in this domain of functioning. (Emphasis added)

30. Having considered the first defendant’s presentation and history, the review panel assessed his total WPI for psychiatric injuries caused by the motor accident to be 19%. As these findings were different to the determination made by the medical assessor, the review panel revoked the medical assessor’s certificate and issued its own permanent impairment certificate.

Judicial review generally

31. This Court has jurisdiction to grant any relief or remedy in the nature of a writ of certiorari, which includes jurisdiction to quash the ultimate determination of a court or tribunal, including both a medical assessor and review panel, if that determination has been made on the basis of an error of law on the face of the record. The face of the record includes the reasons expressed by the court or tribunal for its ultimate determination: s 69 of the Supreme Court Act 1970 (NSW).

Grounds of judicial review

32. The grounds of judicial review are set out at para [2] of the summons. They are as follows.

1. The review panel constructively failed to exercise its jurisdiction and statutory function by failing to conduct its assessment in accordance with the common law principles of causation and the Permanent Impairment Guidelines, which have statutory force pursuant to ss 65 and 133 of the MAC Act. Clauses 1.5 to 1.7 of the Permanent Impairment Guidelines required the review panel to assess causation in accordance with the common law principle that when there has been a subsequent and unrelated condition creating the same or additional losses, the tortfeasor ceases to be responsible for the losses: see Jobling v Associated Dairies [1982] AC 794. The review panel only considered the current impairment caused by psychological injuries, not those caused by subsequent unrelated injuries or conditions. In doing so, the review panel failed to address whether the subsequent condition(s) had resulted in impairment that was the same as (or potentially worse than) the impairment that was caused by the accident, constituting damage for which the insurer was not liable.

2. The review panel constructively failed to exercise its jurisdiction and statutory function by failing to have regard to cl 1.34 of the Permanent Impairment Guidelines, which required the review panel to calculate the impairment caused by a subsequent and unrelated injury or condition. In GIO General v Smith & Ors; Insurance Australia t/as NRMA Insurance v Smith & Ors [2011] NSWSC 802 (“GIO v Smith”), the Court held that in appropriate cases, a reduction for subsequent impairment was required. The review panel failed to calculate and to subtract the impairment caused by the first defendant’s unrelated subsequent dementia.

3. The review panel failed to respond to a substantial and clearly articulated argument advanced by the insurer in its submissions dated 23 April 2019, annexed to its application for review of the medical assessor’s assessment, which were before the review panel. This was a constructive failure to exercise jurisdiction and denial of procedural fairness.

33. I shall deal with judicial review ground 2(b) first, followed by 2(a) and then 2(c), if necessary.

Ground 2(b) - the review panel failed to comply with cl 1.34 of the Permanent Impairment Guidelines

The insurer’s submissions

34. The insurer submitted that the review panel’s approach failed to comply with cl 1.34 of the Permanent Impairment Guidelines.

35. The review panel had diagnosed the first defendant with dementia. It did not suggest that the onset of dementia was related to any injury caused by the accident. As such, the insurer submitted that the dementia was “a subsequent and unrelated injury or condition” within the meaning of cl 1.34 of the Permanent Impairment Guidelines.

36. The insurer submitted that as the review panel had found that “there is objective evidence of a subsequent and unrelated injury or condition”, the question it was then obliged to answer in considering cl 1.34 of the Permanent Impairment Guidelines was whether the first defendant’s dementia resulted in permanent impairment in the same region as his accident-related psychiatric injury.

37. The insurer acknowledged that the words “in the same region” in cl 1.34 would seem to refer to physical rather than psychiatric injuries. Nonetheless, while the wording is awkward, the Court has held that cl 1.34 of the Permanent Impairment Guidelines must be followed when assessing subsequent unrelated psychiatric injuries: see, for example, GIO v Smith.

38. While the review panel found that the first defendant’s dementia did not “dominate” the clinical picture, it explicitly accepted that the dementia influenced his current functioning, particularly in self-care and memory. Both are elemental to the assessment of impairment under the PIRS scale.

39. According to the insurer, it was not open to the review panel simply to “exclude from the mind the effects of…dementia”. Clause 1.34 required the review panel to calculate, not exclude, impairment caused by dementia, particularly in circumstances where the review panel had determined that the impairment existed.

The first defendant’s submissions

40. The first defendant submitted that there are a number of errors in the insurer’s interpretation of cl 1.34 of the Permanent Impairment Guidelines.

41. Firstly, the first defendant submitted that it is wrong to suggest that the review panel had to take into account the effects of dementia when assessing a psychiatric or psychological impairment for the purposes of determining WPI under the Permanent Impairment Guidelines. For the purpose of determining WPI, dementia is a physical injury, not a psychological or psychiatric injury. As is made clear in cl 1.36 of the Permanent Impairment Guidelines, impairment relating from a physical injury must be assessed separately from the impairment resulting from psychiatric or psychological injury, which in this case consisted of the first defendant’s chronic PTSD and Major Depressive Disorder.

42. By way of illustration, the first defendant offered the example of a person who was rendered a quadriplegic in an accident and also suffered PTSD and/or a depressive disorder. It may be said that his or her ability to carry out daily activities (referred to as “adaptation” under the PIRS scales) was substantially impaired, if not destroyed, by physical impairment. However, when assessing that person’s adaptation impairment as a result of the PTSD or depressive disorder, the Permanent Impairment Guidelines require that the effects of those psychological and/or psychiatric injuries be assessed separately from the effects of the physical injuries on the injured person’s activities of daily living.

43. Accordingly, the first defendant submitted that what the review panel was required to do, and did, was put to one side the effects of the first defendant’s dementia and concentrate upon what the effects of his PTSD and Major Depressive Disorder.

44. Secondly, the first defendant submitted that the insurer’s reliance upon cl 1.34 of the Permanent Impairment Guidelines misinterprets the words “resulting in permanent impairment of the same region”. The first defendant submitted that those words are directed to physical, rather than psychological or psychiatric injury. The first defendant submitted that far from being “awkward”, the phrasing of cl 1.34 within the Permanent Impairment Guidelines and the American Medical Association Guides (“the AMA4 Guides”) generally make it clear that psychiatric or psychological injuries are separate and distinct injuries from those suffered to the nervous system, such as dementia. The first defendant’s dementia is not, therefore, “in the same region” at all.

45. Finally, the first defendant made submissions relating to the “objectivity” of the evidence of the first defendant’s impairment. Clause 1.34 of the Permanent Impairment Guidelines requires objective evidence of subsequent and unrelated injuries or conditions resulting in permanent impairment, and then states that where there is no objective evidence of subsequent impairment, its possible presence should be ignored.

46. According to the first defendant, psychological and psychiatric injuries, by their very nature, tend not to be ones which have an objective basis. Instead, in cases like the first defendant’s, the review panel would be reliant upon his subjective history to assess the injuries. The insurer therefore was misguided in referring to the review panel’s “findings” that there was objective evidence of a subsequent or unrelated injury or condition. The first defendant submitted that the review panel did not use those words, nor any similar.

Consideration

47. Clauses 1.34-1.36 of the Permanent Impairment Guidelines are extracted earlier in this judgment. Relevantly, cl 1.34 states that “[i]f there is objective evidence of a subsequent and unrelated injury or condition resulting in permanent impairment in the same region [as the subject injury], its value should be calculated.” As has been determined in relation to other clauses in the Permanent Impairment Guidelines, the word “should” in its context in cl 1.34 should be seen as mandatory: see Boyce per Basten JA at [56]; Richardson bht Richardson v QBE Insurance (Australia) Ltd [2020] NSWSC 366 at [64].

48. Clause 1.36, under the heading “Psychiatric and physical impairment”, reads:

“Impairment resulting from a physical injury must be assessed separately from the impairment resulting from a psychiatric or psychological injury.”

49. The first defendant conceded that cl 1.34 of the Permanent Impairment Guidelines must be followed when assessing subsequent unrelated psychiatric injuries (CB 30, [25]). However, it is the first defendant’s case that dementia is not a psychiatric but rather a physical injury, to which cl 1.34 does not apply.

50. The parties’ submissions on this ground of review are complex and refer variously to the Permanent Impairment Guidelines, the fourth and fifth editions of the Diagnostic and Statistical Manual of Mental Disorders and the AMA4 Guides. It is necessary to set out the relevant sections in some detail.

51. The clause following cl 1.34 of the Permanent Impairment Guidelines, cl 1.35, is headed “Psychiatric Impairment”. It reads:

“Psychiatric impairment is assessed in accordance with ‘Mental and behavioural disorders’ within these [Permanent Impairment] Guidelines.”

52. Under the heading “Assessment of mental and behavioural disorders” of the Permanent Impairment Guidelines, cls 1.213 and 1.214 state:

“The impairment must be attributable to a psychiatric diagnosis recognised by the current edition of the Diagnostic & Statistical Manual of Mental Disorders (DSM) or the current edition of the International Statistical Classification of Diseases & Related Health Problems (ICD). The impairment evaluation report must specify the diagnostic criteria on which the diagnosis is based.

Impairment due to physical injury is assessed using different criteria outlined in other parts of these [Permanent Impairment] Guidelines.” (Emphasis added)

53. Clause 1.217, in reference to the PIRS scale, notes that “the impairment rating must be consistent with a recognised psychiatric diagnosis, and based on the psychiatrist’s clinical experience.”

54. The first defendant submitted that the AMA4 Guides clarify that an impairment of the central nervous system is not a psychiatric impairment (p 141 at [4.1(b)]). Moreover, in the current edition of the Diagnostic and Statistical Manual of Mental Disorder (“DSM-5”), “dementia” is included in the diagnosis of “neurocognitive disorders”.

55. Extracts from the DSM-5 under the heading “Neurocognitive Disorders” which are relevant to these proceedings are as follows:

“Although cognitive deficits are present in many if not all mental disorders (e.g., schizophrenia, dipolar disorders), only disorders whose core features are cognitive are included in the [neurocognitive disorder] category. The [neurocognitive disorders] are those in which impaired cognition has not been present since birth or very early life, and thus represents a decline from a previously attained level of functioning.

Dementia is subsumed under the newly named entity major neurocognitive disorder, although the term dementia is not precluded from use in the etiological subtypes in which that term is standard.

The term dementia is retained in DSM-5 for continuity and may be used in settings where physicians and patients are accustomed to this term. Although dementia is the customary term for disorders like degenerative dementias that usually affect older adults, the term neurocognitive disorder is widely used and often preferred for conditions affecting younger individuals, such as impairment secondary to traumatic brain injury or HIV infection. Furthermore, the major [neurocognitive disorder] definition is somewhat broader than the term dementia, in that individuals with substantial decline in a single domain can receive this diagnosis, most notably the DSM-IV category of “Amnestic Disorder”, which would now be diagnosed as major [neurocognitive disorder] due to another medical condition and for which the term dementia would not be used.” (Emphasis added)

56. Thus, although the DSM-5 subsumes “dementia” into a newly-named and more inclusive category, “major neurocognitive disorder”, the term “dementia” is retained for continuity and may be used where customary.

57. In the previous edition (“DSM-IV”) from which the term “dementia” is retained in the DSM-5, “dementia” was listed as a distinct mental disorder. However, the introduction to the DSM-IV contained the following caveat:

“Although this volume is titled the Diagnostic and Statistical Manual of Mental Disorders, the term mental disorder unfortunately implies a distinction between ‘mental’ disorders and ‘physical’ disorders that is a reductionistic [sic] anachronism of mind/body dualism. A compelling literature documents that there is much ‘physical’ in ‘mental’ disorders and much ‘mental’ in ‘physical’ disorders. The problem raised by the term ‘mental’ disorders has been much clearer than its solution, and, unfortunately the term persists in the title of DSM-IV because we have not found an appropriate substitute.

Moreover, although this manual provides a classification of mental disorders, it must be admitted that no definition adequately specifies precise boundaries for the concept of ‘mental disorder’. The concept of mental disorder, like many other concepts in medicine and science, lacks a consistent operational definition that covers all situations. All medical conditions are defined on various levels of abstraction…. Mental disorders have also been defined by a variety of concepts…. Each is a useful indicator for a mental disorder, but none is equivalent to the concept, and different situations call for different definitions.

Despite these caveats, the definition of mental disorder that was included in the DSM-III and DSM-III-R is presented here because it is as useful as any other available definition and has helped to guide decisions regarding which conditions on the boundary between normality and pathology should be included in DSM-IV. In DSM-IV, each of the mental disorders is conceptualised as a clinically significant behavioural or psychological syndrome or pattern that occurs in an individual and that is associated with present distress…or disability…or with the significant increased risk of suffering death, pain, disability or an important loss of freedom…” (Emphasis added)

58. The DSM-5 states that a “mental disorder” requires the following elements:

“A mental disorder is a syndrome characterised by clinically significant disturbance in an individual’s cognition, emotional regulation, or behaviour that reflects a dysfunction in the in the psychological, biological or developmental processes underlying mental functioning. Mental disorders are usually associated with significant distress or disability in social, occupational or other important activities.”

59. In my view, the DSM-5 cannot be understood to say that because dementia is best defined as a major neurocognitive disorder, it is not a psychiatric disorder. For one thing, the DSM-5 does not state that major neurocognitive disorders cannot also be psychiatric disorders. Moreover, the DSM-5 states that categorising dementia as a major neurocognitive disorder does not preclude from use standard etiological subtypes of the term. Certainly prior to the DSM-5, dementia had been categorised as a mental disorder, which was a “clinically significant behavioural or psychological syndrome or pattern”.

60. Perhaps more importantly, the DSM-IV, from which the term “dementia” is retained in the DSM-5, specifically cautions against artificially distinguishing between physical and psychological disorders. I do not think the distinction, if it is to be found, can be drawn from the DSM-5.

61. Clause 1.213 of the Permanent Impairment Guidelines also refers to the current edition of the International Statistical Classification of Diseases & Related Health Problems (“ICD-11”). Like the DSM-5, the ICD-11 classifies “dementia” as a neurocognitive disorder. The primary entry for dementia reads:

“Dementia is an acquired brain syndrome characterized by a decline from a previous level of cognitive functioning with impairment in two or more cognitive domains (such as memory, executive functions, attention, language, social cognition and judgment, psychomotor speed, visuoperceptual or visuospatial abilities). The cognitive impairment is not entirely attributable to normal aging and significantly interferes with independence in the person’s performance of activities of daily living. Based on available evidence, the cognitive impairment is attributed or assumed to be attributable to a neurological or medical condition that affects the brain, trauma, nutritional deficiency, chronic use of specific substances or medications, or exposure to heavy metals or other toxins.”

62. Again, far from categorising dementia as a physical condition, the ICD-11 repeatedly refers to dementia as a cognitive impairment.

63. I also agree with the insurer that treating dementia as a purely physical condition fails to take into account the psychiatric manifestations of dementia relevant when assessing impairment under the PIRS scale. Although the six categories of the scale are directed to functional independence, cognitive impairment is a relevant consideration, particularly under the categories “Self care and personal hygiene”, “Social functioning”, “Concentration, Persistence and Pace” and “Adaptation”. The neurocognitive disorders to which the DSM-5 and ICD-11 refer, including dementia, explicitly contemplate deterioration in cognition.

64. Further, cl 1.216 of the Permanent Impairment Guidelines addresses cognitive deficits, and authorises a medical assessor dealing with a psychiatric impairment to take account of CT and MRI scans, as well as EEGs and psychometric tests. This again illustrates the clear overlap between cognitive deficits and a recognised psychiatric diagnosis.

65. For these reasons, in my view it cannot be said that the Permanent Impairment Guidelines, DSM-5, ICD-11 or AMA4 Guides have the effect of defining dementia as a physical condition for the purposes of a determination under cl 1.34 of the Permanent Impairment Guidelines.

66. More importantly, that view is not one expressed in the review panel’s reasons.

67. When assessing the first defendant’s accident-related impairment, the review panel stated (CB 54):

“The review panel adopted a different methodology [from the medical assessor] for assessing impairment caused by the accident. That methodology was to assess current whole person impairment caused by psychiatric injury, while excluding from the mind the effects of the painful disabling condition or any dementia or any other problem.” (My emphasis)

68. When considering the score to be attached to the first defendant’s symptoms in each category in the PIRS scale, the review panel stated that it intended to “exclude the effects of physical injury and dementia” (CB 55). It did not state that it did not need to consider dementia because it was a physical condition. The only explanation offered by the review panel for excluding dementia from its determination was that it was of the view that dementia “did not dominate the clinical picture”. That is not the approach required under cl 1.34 of the Permanent Impairment Guidelines. Where the review panel found objective evidence of a subsequent or unrelated condition resulting in permanent impairment in the same region, it was required to calculate its value. It did not do so. This constituted an error of law and a constructive failure to exercise jurisdiction: see Boyce.

69. I note that although cl 1.34 of the Permanent Impairment Guidelines requires the medical assessor to calculate any subsequent unrelated injuries, it does not require a deduction of that value: see GIO v Smith at [54]. It is also possible that if the review panel had calculated the first defendant’s impairment in relation to his dementia, it may have apportioned a value of zero. However, although the review panel’s reasons are to be beneficially construed, they must set out the actual path of reasoning in terms sufficiently clear to enable this Court to determine whether it fell into error: see Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; 303 ALR 64 (“Wingfoot”) at [55]. In my view, it is not possible to infer from the review panel’s reasons that the first defendant’s WPI of 19% represented a value that had, in some way, appropriately accounted for a calculated value in relation to his dementia, as required under cl 1.34.

70. The first defendant made two ancillary submissions on this ground of review which I will briefly address.

71. The first is to the effect that the review panel did not, nor could it have, found “objective” evidence of dementia for the purposes of cl 1.34 of the Permanent Impairment Guides because psychological injuries can only be subjectively assessed. This submission would seem to suggest that no psychological condition—save perhaps one which is indicated on a diagnostic scan, which again illustrates the overlap between physical and psychological conditions discussed earlier—could be relevant to a calculation under cl 1.34. This submission cannot be correct. There is no indication that a medical assessor cannot consider a claimant’s presentation, which satisfies relevant diagnostic criteria, to be “objective evidence” of a psychiatric condition. This is, for example, the approach taken by the review panels in both GIO v Smith and Smith v Insurance Australia [2018] NSWSC 1606 in respect of their relative claimants’ psychiatric injuries.

72. The second is the first defendant’s more general submission that psychological conditions cannot be said to exist “in the same region” as the subject injury for the purposes of a calculation under cl 1.34. Again, in my view this cannot be correct. In both GIO v Smith and Smith v Insurance Australia, psychiatric injuries were held to exist together in the same “region” under cl 1.34.

73. As previously stated, under cl 1.34 of the Permanent Impairment Guidelines, where the review panel found objective evidence of a subsequent or unrelated condition resulting in permanent impairment in the same region as the subject injury, it was required to calculate its value. It did not do so. This constituted an error of law and a constructive failure to exercise jurisdiction. As ground 2(b) is made out, it is not necessary to consider the insurer’s other grounds in great detail. I will turn to consider them briefly.

Ground 2(a) - the review panel failed to follow the correct legal approach to causation

The insurer’s submissions

74. The insurer submitted that the review panel also failed to carry out its statutory task by failing to conduct its assessment in accordance with the Permanent Impairment Guidelines and with common law principles of causation.

75. Clauses 1.5 to 1.7 of the Permanent Impairment Guidelines required the review panel to assess causation in accordance with common law principles. At common law, when there is a subsequent and unrelated condition creating the same or additional losses, the tortfeasor ceases to be responsible for the losses: see DNM Mining Ply Ltd v Barwick [2004] NSWCA 137 (“Barwick”) per Giles JA at [39] (Santow JA and Windeyer J agreeing), K-Mart Australia Ltd v McCann [2004] NSWCA 283 (“McCann”) per Pearlman AJA at [49] (Handley and lpp JJA agreeing).

76. The insurer submitted that the review panel did not follow this principle of causation. It did not consider impairment caused by the first defendant’s dementia, which was a subsequent unrelated condition. In doing so, the review panel failed to address whether the subsequent condition had resulted in impairment that was the same as, or potentially worse than, the impairment that was caused by the accident, and therefore amounting to damage for which the insurer was not liable.

The first defendant’s submissions

77. The first defendant submitted that the review panel properly addressed the issues of causation in accordance with the Permanent Impairment Guidelines and the AMA Guidelines.

78. The first defendant submitted that if it were the case that the common law required a subsequent and unrelated condition to be assessed, the review panel’s findings make it clear that any symptoms arising from the first defendant’s dementia did not result in impairment that was the same as, or potentially worse than, the impairment caused by the accident, as the insurer submitted. The review panel’s certificate states that while the first defendant’s dementia may have “influence[d]” his current functioning, it did not dominate his presentation or clinical picture. The review panel’s methodology was to assess the first defendant’s WPI caused by psychiatric injury, excluding the effects of any pain or dementia. The first defendant submitted that this approach makes it clear that the review panel only considered the level of WPI arising out of those psychological injuries suffered in the accident. The review panel was of the view that such injuries were of secondary importance or even relative unimportance in relation to the first defendant’s psychological makeup.

Consideration

79. Clauses 1.5-1.7 of the Permanent Impairment Guidelines are reproduced earlier in this judgment. In short, they state that in determining causation, medical assessors must be aware of relevant provisions of the AMA4 Guides and common law principles. Under cl 1.7 of the Permanent Impairment Guidelines, the review panel was required to determine whether the injury (and the associated impairment) was caused or materially contributed to by the motor accident. The accident did not have to be the sole cause, so long as it was a contributing cause which was more than negligible.

80. I have extracted the relevant portions of the review panel’s assessments of impairment under the PIRS scale earlier in this judgment. In its assessment, the review panel was careful to calculate WPI only in relation to impairments caused by the first defendant’s PTSD and Major Depressive Disorder, as it was of the view that “some degree of dementia” did not “dominate [his] clinical picture” (CB 54).

81. As outlined in relation to ground 2(b), this was not the correct approach under cl 1.34 of the Permanent Impairment Guidelines. However, in my view it cannot be said that on the review panel’s reasons, it is possible to conclude that the insurer ceased to be responsible for the first defendant’s losses attributable to the accident because they were the same as, or overborne by, his dementia. That is what would be required for the insurer to succeed on ground 2(a). As such, it is not necessary to consider this ground of review further.

Ground 2(c) - the review panel failed to respond to a substantial and clearly articulated argument

82. The final ground of review may be dealt with briefly. The insurer submitted that the review panel failed to respond to a substantial and clearly articulated argument which the insurer advanced in its submissions dated 23 April 2019. The argument in the insurer’s submissions was that the medical assessor was required to apply the common law principle of causation referred to under ground 2(a).

83. A failure to respond to a substantial and clearly articulated argument is a constructive failure to exercise jurisdiction and a denial of procedural fairness: see Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 197 ALR 389; 77 ALJR 1088; [2003] HCA 26 per Gummow and Callinan JJ at [24]; Allianz Australia Insurance Ltd v Cervantes (2012) 61 MVR 443 per Basten JA at [19]-[22], Rodger v De Gelder (2015) 71 MVR 514 at per Gleeson JA at [109] (Macfarlan and Leeming JJA agreeing)).

84. However, it is well established that a decision maker is not required to state why he or she did not accept certain matters. The review panel’s duty was to state the real reasons for its decision: see Wingfoot at [56]. The review panel was not obliged to set out reasons for a finding which it did not make. What it was required to do was expose its subjective thought process in enough detail to allow a Court to determine whether it fell into error: see Allianz Australia Insurance Ltd v Larriera [2016] NSWSC 441 (“Larriera”) at [17].

85. In Larriera, Campbell JA stated at [20]:

“[20] In applying a beneficial construction to the Assessor’s reasons, it is permissible to fill gaps in expression ‘as a matter of necessary inference on a fair reading of the reasons’: Zahed v IAG Ltd t/as NRMA Insurance [2016] NSWCA 55.”

86. Campbell JA went on to state at [26] that “a counsel of perfection is not required” in providing reasons. If the basis of the review panel’s findings is clear from a reading of its decision, there will be no error. It may also be implicitly clear from its reasons that the review panel rejected certain submissions. So long as the implication is clear, no more is required of it to discharge its duty of fairness to a party, however a party may try to categorise the putative error: see Larriera at [17].

87. I agree with the first defendant’s submissions on this ground that the review panel clearly stated that it did not consider his dementia to have a significant bearing on its task, for the reasons set out in relation to ground 2(a). In other words, it is implicitly clear from its reasons that the review panel rejected the insurer’s submission that it ceased to be responsible for the first defendant’s losses because they were the same as, or overborne by, his dementia. This ground of review fails.

Result

88. A failure to comply with cl 1.34 of the Permanent Impairment Guidelines amounts to an error of law on the face of the record. By failing to properly apply cl 1.34, the review panel also failed to carry out its statutory task and fell into jurisdictional error.

89. The result is that the review panel has constructively failed to exercise jurisdiction and made errors of law in relation to its findings on WPI arising from the accident. In the exercise of my discretion, it is my view that the review panel’s decision should be quashed and that the proceedings be remitted to SIRA to be determined according to law. There is no compelling reason to make an order that the proceedings be heard by a differently constituted review panel, as this is a determination to be made by SIRA.

Costs

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

The Court declares that:

1. The certificate and reasons of the review panel dated 9 September 2019 as it relates to findings on whole person impairment arising from the accident on 29 August 2019 is vitiated by an error of law and jurisdictional error.

The Court makes an order:

1. In the nature of certiorari removing into the Court the certificate and reasons of the review panel dated 9 September 2019 as it relates to findings on whole person impairment and quashing that certificate.

The Court further orders that:

1. The matter is remitted to the State Insurance Regulatory Authority to be determined according to law.

2. The first defendant is to pay the plaintiff’s costs on an ordinary basis.

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Decision last updated: 29 June 2020