Allianz Australia Insurance Ltd v Kyle - [2014] NSWWCCPD 29

WORKERS COMPENSATION COMMISSION
DETERMINATION OF APPEAL AGAINST A DECISION OF THE COMMISSION CONSTITUTED BY AN ARBITRATOR
CITATION:	Allianz Australia Insurance Ltd v Kyle [2014] NSWWCCPD 29
APPELLANT:	Allianz Australia Insurance Ltd
FIRST RESPONDENT:	Eric James Kyle
SECOND RESPONDENT:	Cambridge Integrated Services Australia Ltd t/as Xchanging
EMPLOYER:	Australian Health & Nutrition Association Ltd t/as Sanitarium Health Food Company (wrongly sued as Sanitarium Health Food Company)
FILE NUMBER:	A1-5035/13
ARBITRATOR:	Mr G Egan
DATE OF ARBITRATOR’S DECISION:	31 January 2014
DATE OF APPEAL DECISION:	21 May 2014
SUBJECT MATTER OF DECISION:	Apportionment between a personal injury and an aggravation of a disease; assessment of medical evidence; alleged failure to give reasons; addition of insurers as parties; application of principles in Hancock v East Coast Timber Products Pty Ltd [2011] NSWCA 11; 8 DDCR 399
PRESIDENTIAL MEMBER:	Deputy President Bill Roche
HEARING:	On the papers
REPRESENTATION:	Appellant:	Sparke Helmore Lawyers
First Respondent:	Gorman Jones Lawyers
Second Respondent: Hicksons Lawyers
ORDERS MADE ON APPEAL:	1. The Arbitrator’s determination of 31 January 2014, as amended on 28 February 2014, is confirmed. 2. The matter is remitted to the Arbitrator for determination of all outstanding issues. 3. The appellant, Allianz Australia Insurance Ltd, is to pay the respondents’ costs of the appeal, as agreed or assessed.

INTRODUCTION

This appeal concerns apportionment of liability between insurers under ss 22 and 22A of the Workers Compensation Act 1987 (the 1987 Act).

BACKGROUND

The worker, Eric Kyle, worked for Australian Health & Nutrition Association Ltd t/as Sanitarium Health Food Company (wrongly sued as Sanitarium Health Food Company) (Sanitarium) between 1985 and November 2004.
Mr Kyle suffered injuries to his left knee on 10 December 1985, 15 January 1993, 17 January 1993, in July 1994, and as a result of the nature and conditions of his employment between 1985 and when he ceased work in November 2004. Further, or in the alternative, the injuries are said to arise as a result of a disease of gradual onset. Some of the injuries also involved Mr Kyle’s right knee and back but the claim relates only to his left knee. The insurer on risk when Mr Kyle stopped work in 2004 paid voluntary compensation until November 2011.
Though Sanitarium had several insurers between 1985 and November 2004, it is only necessary to consider two. Allianz Australia Insurance Ltd (Allianz Australia/the 1926 Act insurer) insured Sanitarium for all relevant periods up to 31 December 1986. Cambridge Integrated Services Australia Ltd t/as Xchanging (Cambridge/the 1987 Act insurer), acting for several insurers under the lead agent’s scheme, covered all periods from 1 January 1988 until November 2004. The gap in insurance between 1 January 1987 and 31 December 1987 is of no consequence.
Mr Kyle claimed weekly compensation from 21 August 2011 to 31 December 2012 and hospital and medical expenses of $25,000 in respect of (proposed) knee replacement surgery for his left knee.
At the arbitration, the parties agreed that the following issues were in dispute:
(a)     whether the proposed left knee replacement is reasonably necessary as a result of the 1985 injury or the nature and conditions Mr Kyle’s employment up to 2004;
(b)     was Mr Kyle incapacitated for work between 21 August 2011 and 31 December 2004 as a result of either of those injuries, and
(c)     if Mr Kyle was entitled to weekly compensation, in what amount.
On behalf of itself and the 1987 Act insurers it represented, Cambridge argued that the need for the proposed surgery, and the incapacity in 2011, was either a result of the 1985 knee injury, during which Mr Kyle suffered a partial tear of the left meniscus, or the secondary effects of surgery on the left knee in 1994, which surgery was said to be a direct consequence of the 1985 injury and the cost of which was met by the 1926 Act insurer. The secondary effect of the 1994 surgery was said to be osteoarthritis in the left knee, which caused the need for the knee replacement operation and the incapacity.
Allianz Australia, the 1926 Act insurer, argued that the need for surgery and the incapacity resulted from a disease process, which had been caused or aggravated by Mr Kyle’s employment up to 2004, and that the insurer on risk at that time (Cambridge) was the relevant insurer and was solely liable. Mr Kyle agreed with that submission.
The Arbitrator noted that all doctors accepted that Mr Kyle has a need for the knee replacement surgery. In essence, he found that Mr Kyle suffered two injuries: first, a partial tear of his left medial meniscus in the 1985 injury (described by the Arbitrator as a frank injury, but more accurately described as a s 4(a) personal injury) and, second, an aggravation of a disease (osteoarthritis) as a result of several subsequent incidents and as a result of the nature and conditions of Mr Kyle’s employment up to November 2004 (an aggravation injury under s 4(b)(ii)).
As the Arbitrator found that Mr Kyle suffered two injuries, this gave rise to the need to apportion liability between Allianz Australia and Cambridge. He found that, as a result of the 1985 injury, Mr Kyle underwent a partial meniscectomy in 1994, and that that surgery led to medial compartment arthritis. As arthritis brought about the need for the proposed knee replacement surgery, and the incapacity, the Arbitrator apportioned liability 70 per cent to Allianz Australia and 30 per cent to Cambridge.
The Commission issued a Certificate of Determination on 31 January 2014, which was amended on 28 February 2014. The amended certificate records:
“The Commission determines:
1.       A finding that total left knee replacement is reasonably necessary as result of both the injury on 10 December 1985 and aggravations due to the nature of the applicant’s employment with the respondent up to 2004.
2.       The applicant has been totally incapacitated for employment from 21 August 2011 to 1 March 2013 as a result of the injuries to his left knee.
3. The respondent is to pay weekly payments pursuant to the former section 37 of the Workers Compensation Act 1987 for a single worker at the statutory rate from time to time from 21 August 2011 to 31 December 2012.
4.       Both the need for surgery and incapacity have arisen by way of contributions of 70 per cent due to the 1985 injury and 30 per cent due to the aggravation(s) of a disease up to 2004. The insurers on risk in respect of each injury should pay the appropriate portion of liability for weekly payments.
5.       The parties are given leave to file brief written submissions in accordance with the reasons.
6.       Orders as to which, if any, insurer should pay the cost of proposed treatment will be made following brief further submissions.
7.       The respondent is to pay the applicant’s costs as agreed or assessed.
Allianz Australia has appealed the Arbitrator’s decision on apportionment. For the reasons explained below, the appeal is unsuccessful.

PRELIMINARY MATTERS

Before dealing with the appeal, two preliminary matters arise.
In StateCover Mutual Ltd v Smith [2012] NSWCA 27, Macfarlan JA (Beazley JA (as her Honour then was) and Campbell JA agreeing) observed (at [22]) that it would be wise for insurers, such as the insurers in the present matter, to apply to the Commission for a formal order joining them as parties to ensure that their right to appeal is put beyond doubt.
Neither insurer sought to be joined as parties. However, as the Registrar has power to join parties on his/her own motion, the Registrar has, at my direction, joined Allianz Australia and Cambridge as parties in the present matter under Pt 11 r 1(4)(b) of the Workers Compensation Commission Rules 2011 and served appropriate notices on all parties. Neither insurer has objected to being joined as a party.
The second matter is that the Arbitrator’s findings with respect to the cost of the proposed surgery merely determined that the cost of the surgery is reasonably necessary as a result of the pleaded injuries and the issue of apportionment. He made no final order for the payment of the cost of that surgery, but sought further submissions on another issue, which has not yet been resolved.
Therefore, on the issue of the cost of the proposed knee surgery, the Arbitrator’s orders have not finally disposed of the parties’ rights (Licul v Corney [1976] HCA 6; 180 CLR 213 at 224–225) and they are interlocutory orders. As a result, Allianz Australia requires leave to appeal that part of the Arbitrator’s decision (s 352(3A) of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act)).
Given that the Arbitrator’s orders have finally disposed of the parties’ rights with respect to Mr Kyle’s entitlement to weekly compensation, the Arbitrator’s order that that part of the award be paid in the same proportions as the cost of the proposed surgery, and that the appellant contends that its liability is “de minimus”, I believe that determining the appeal is necessary and desirable for the proper and effective determination of the dispute and, so far as it is necessary, I grant leave to appeal.

ON THE PAPERS

Section 354(6) of the 1998 Act provides:
“(6) If the Commission is satisfied that sufficient information has been supplied to it in connection with proceedings, the Commission may exercise functions under this Act without holding any conference or formal hearing.”
Having regard to Practice Directions Nos 1 and 6; the documents that are before me, and the submissions by the parties that the appeal can proceed to be determined on the basis of these documents, I am satisfied that I have sufficient information to proceed “on the papers” without holding any conference or formal hearing and that this is the appropriate course in the circumstances.

ISSUES IN DISPUTE

The issues in dispute in the appeal are whether the Arbitrator erred in:
(a) failing to provide any or any adequate reasons for apportioning the liability in the manner he did, and
(b) making an apportionment of liability that was against the weight or the evidence.
Though two grounds have been identified, the submissions in support have dealt with both grounds as raising one issue and I will deal with the matter in the same way.

SUBMISSIONS

Allianz Australia’s solicitor, Mr Geoff Wolf, submitted that the Arbitrator failed to pay proper consideration to the factual and medical evidence that Mr Kyle was employed to work performing duties that constituted an aggravation of the disease for a period of almost 20 years and the significant weight Mr Kyle placed on the contribution of that employment. He said that the contribution from the long period of employment subsequent to the 1985 injury was at least as significant, if not more so, than the initial incident.
In addition, Mr Wolf argued, the Arbitrator disregarded the significant period between the initial 1985 injury and the increased symptoms leading to surgery in 1994, with three frank injuries in the intervening period. The Arbitrator failed to address the impact of the pleaded subsequent injuries.
In support of his position, Mr Wolf referred to evidence from Dr Pillemer, orthopaedic surgeon, in his report dated 5 December 2013, in which he detailed each frank event and the worsening of Mr Kyle’s condition in 2004 following a return to normal duties. Dr Pillemer attributed the liability to the nature of the work Mr Kyle performed, which caused an aggravation of the underlying disease.
Mr Wolf also relied on evidence from Dr Bodel, orthopaedic surgeon. In his report of 1 December 2005, Dr Bodel took a history that Mr Kyle worked at “his normal duties and coped reasonably well for the next nine years” (after the 1985 injury). He further recorded that there was a “flare up” following a further incident following which Mr Kyle underwent arthroscopy.
Dr Bodel recorded a further “significant” increase in symptoms (in 2003). Following this, Mr Kyle did office-based activities for six months and then tried work back in the factory, but only lasted three months. Dr Bodel said that the various incidents at work were causative of the pain and the later incidents were the cause of the need for the proposed hemiarthroscopy.
In his subsequent report, Dr Bodel said that Mr Kyle suffered from a disease of gradual onset for which each episode has caused a material aggravation, as well as meniscal injury caused by the series of work incidents.
Mr Wolf also relied on a report from Dr Best, orthopaedic surgeon, dated 6 October 2009, which recorded a number of incidences where Mr Kyle suffered injury. Dr Best noted that, following the injury in December 2003, Mr Kyle underwent arthroscopic debridement in March 2004, culminating in him never returning to work. Dr Best stated that the nature and conditions of Mr Kyle’s employment as well as the multiple injuries “have caused a permanent deterioration of the degenerative process”, with the condition likely to deteriorate.
In addition, Mr Wolf referred to the evidence from the treating specialist, Dr Chan, who diagnosed Mr Kyle to have “significant left knee osteoarthritis”.
Mr Wolf submitted that, contrary to these opinions, the Arbitrator relied on the opinion of the Approved Medical Specialist, Dr Breit, who recorded details only of the 1985 incident and noted that there were “no other trauma episodes as far as the knees are concerned” and did not address the issue of work related aggravation of the disease process. His opinion as to whether the surgery resulted from the 1985 injury was therefore flawed.
Mr Wolf contended that the evidence of a significant contribution to the aggravation and deterioration of the disease from the subsequent injuries and the nature of the work:
“is overwhelming and the Arbitrator has provided no reasons, or no satisfactory reasons as to why the evidence of the [sic] Dr Breit as to causation should be accepted over the remaining body of evidence that specifically addresses the issue of liability for the need for treatment.”
Further, Mr Wolf added, the Arbitrator provided no reasons to support his approach to the apportionment of weekly payments. Of most significance to the weekly payments claim, so Mr Wolf argued, is the protracted period after the 1985 incident when Mr Kyle performed his normal duties. It was only after further incidents commencing in 1993 that any subsequent economic incapacity arose. Ultimately, following a significant deterioration in Mr Kyle’s condition while performing normal duties, he became so incapacitated that he was unable to continue employment. In light of these matters, there was no rational basis to apply the same apportionment to the weekly payments entitlements as was applied to the need for surgery.
Mr Wolf conceded that it was open to the Arbitrator to find both a frank injury and a disease. However, in light of the subsequent frank incidents, and the consistent opinion from all the experts that the work performed over a period of almost 20 years aggravated the disease, the contribution to Mr Kyle’s incapacity flowing from the frank incident in 1985 “is de minimus and that apportionment of 70 per cent of liability to the appellant is grossly inconsistent with the evidence”.
In summary, the appellant’s complaints are that the Arbitrator erred in:
(a)     failing to pay proper consideration to the factual and medical evidence that Mr Kyle’s duties constituted an aggravation of the disease of osteoarthritis and the significant weight Mr Kyle placed on the contribution of that employment;
(b)     disregarding the significant period between the initial 1985 injury and the increased symptoms leading to surgery in 1994, with three frank injuries in the intervening period;
(c)     failing to address the impact of the pleaded injuries received by Mr Kyle after 1985;
(d)     relying on the “flawed” evidence from Dr Breit;
(e)     failing to give satisfactory reasons as to why the evidence from Dr Breit as to causation should be accepted;
(f)      giving no reasons to support his approach to the apportionment of weekly payments, and
(g)     finding the same apportionment of weekly compensation as for the claim for the proposed surgery when there was no rational basis to do so.
On behalf of Cambridge, Mr Najeh Marhaba, solicitor, submitted that the Arbitrator correctly applied and considered the test required by s 22 of the 1987 Act and that he gave adequate reasons for his decision. The Arbitrator did not rely solely upon Dr Breit’s opinion.
Mr Marhaba submitted that, contrary to the appellant’s contentions, the Arbitrator considered the lengthy period involved, but given the initial disruption to the left medial meniscus and the substantial effects of the surgery resulting from it, he considered the majority of the contribution remained from the effects of the 1985 injury. In light of this determination, the Arbitrator had no reason to treat the contributions to incapacity differently to that of the surgery.
Mr Marhaba said that the Arbitrator extensively considered and summarised the medical evidence, including the evidence referred to by Mr Wolf, and based his decision on the conclusion that the 1985 injury produced a partial tear of the left medial meniscus, resulting in a partial medial meniscectomy in 1994. He accepted the medical evidence that meniscectomy leads to medial compartment arthritis.
In conclusion, Mr Marhaba argued that the appellant had failed to establish that the Arbitrator’s reasons were inadequate, or that he failed to fairly and lawfully determine the application.
Mr Kyle’s solicitor, Ms Anna Gordon, submitted that once it is accepted that Dr Breit’s opinion cannot be impugned, then the issue is whether it was open to the Arbitrator to prefer Dr Breit’s opinion over the other evidence and the weight the Arbitrator gave to that evidence was a matter for the Arbitrator’s discretion and not a matter for review. She contended that the appellant seeks nothing more than an opportunity to argue a case that has already been argued and lost.

DISCUSSION AND FINDINGS

I do not accept Mr Wolf’s submissions.
The assertion that the Arbitrator failed to give proper consideration to the factual and medical evidence that Mr Kyle was employed in duties that constituted an aggravation of the disease for almost 20 years is incorrect. The Arbitrator carefully reviewed the relevant medical and lay evidence.
To properly assess the appellant’s complaints on appeal, it is necessary to consider the evidence, and the Arbitrator’s reasons, with a view to determining the nature and extent of Mr Kyle’s left knee injuries. The following summary essentially follows the Arbitrator’s review of the evidence.
In a medical certificate dated 22 January 1986, which clearly related to the 1985 injury, the attending general practitioner diagnosed a “strained (L) medial cartilage with effusion”. Dr Laird, orthopaedic surgeon, felt that Mr Kyle had “torn a cartilage and recommended arthroscopy of both” knees. Given the absence of radiological evidence at the time of Dr Laird’s opinion, the Arbitrator correctly assumed that Dr Laird based his opinion on a clinical diagnosis. The Arbitrator noted that, with conservative treatment, Mr Kyle’s knees improved but, as noted by Dr Bodel, he continued to suffer pain and discomfort.
The Arbitrator then referred to the two January 1993 incidents. In the first, on 15 January 1993, Mr Kyle suffered further injury to both knees while moving a mixer. In the second, on 17 January 1993, he suffered a further “aggravation” to his right knee when he slipped. An accident report recorded that he “strained both cartliges [sic] (old injuries seven yrs [sic] ago)” (emphasis added). (As there were no injuries in 1986, the reference to “old injuries” was clearly a reference to the December 1985 incident.) Mr Kyle had physiotherapy on both knees and was ultimately referred to Dr O’Keefe, orthopaedic surgeon.

On 14 July 1994, Dr O’Keefe noted the provisional diagnosis by Dr Laird of a torn cartilage and recommended arthroscopic surgery. On examination, Mr Kyle was tender over both knees (the right the more symptomatic) and had a positive grind test, which indicated a tear of his medial cartilage. Dr O’Keefe felt that Mr Kyle had a degenerative meniscal tear in his right knee that had “almost certainly been present since 1986 [sic, 1985]”. X-rays revealed minimal arthritic changes in his knees. Dr O’Keefe performed arthroscopies on each knee, but the operation reports are not in evidence.
The Arbitrator referred (at [19]) to Dr O’Keefe’s evidence and said (at [20]) that Dr O’Keefe did not provide a specific opinion as to whether Mr Kyle suffered a meniscal tear in his left knee.
The Arbitrator referred to an undated employer’s report of injury form on a letterhead bearing “MMI”. Under “how did this injury occur?”, the following appears:
“10/12/85 Tear [sic] cartlige [sic] both knees. Saw specialist with recurrent pain and strain. 14/7/94 Dr O’Keefe operation on R knee asap 5/10/94 then when healed left knee.” (emphasis added)
A compensation claim form to Switzerland Insurance Workers Compensation (NSW) Ltd dated 20 September 1994, with an MMI claim number, is to the same effect as the undated employer’s report of injury form.
The Arbitrator said (at [22]), and it has not been challenged on appeal, that it was common ground that the arthroscopies in 1994 were the subject of a claim against Allianz Australia and that it paid for those procedures.
On 4 December 2003, in a further accident report, Mr Kyle reported kneeling on his knees. He complained of pain and swelling in his right knee, but made no mention of his left knee.
On 25 February 2004, Mr Kyle reported an incident that occurred on 16 February 2004. He wrote:
“Aggravation of old injury (previous operation of [sic] left knee)[.] Favouring right knee (already injured) has forced excess strain on old injury also. Specialist visit for Right knee 24/2/04 after inspection has recommended treatment for left knee.” (emphasis added)
Mr Kyle noted that during consultation for his right knee with a specialist on 24 February 2004, the specialist also recommended treatment for the left knee.
On 26 February 2004, Mr Kyle completed a claim form in respect of his left knee. Under “how the injury occurred and what were you doing when the injury happened?” Mr Kyle wrote:
“Aggravation of old injury, due to favouring right knee (already injured) strain from ladders, repetitive lifting etc.” (emphasis added)
The Arbitrator correctly observed (at [26]) that no party had addressed on the allegation that Mr Kyle’s left knee condition in 2004 arose as a result of favouring his right knee and he did not consider it. The appellant has not challenged this statement.
X-rays of both knees on 25 February 2004 revealed medial joint compartment narrowing on the right side causing varus angulation with less severe joint space narrowing on the left.
On 22 March 2004, Mr Kyle underwent a right knee hemiarthroplasty (a uni-compartmental replacement) and returned to work on suitable duties after six weeks and attempted to return to his pre-injury duties six weeks after that. Vero, an insurer under the 1987 Act, paid the cost of this surgery.
In November 2004, Mr Kyle stopped work. His statement of 30 November 2005 merely recorded that “[d]ue to my injuries I ceased work in November 2004”, but gave no further explanation. The insurer on risk in 2004 paid weekly compensation to Mr Kyle from 2004 until 2011.
The Arbitrator noted (at [38]) that, given the way the parties’ cases were developed during submissions, the issue was whether the disease of osteoarthritis was:
“a result of the 1985 injury (or a sequelae of the treatment necessary as a result of that injury) or whether the osteoarthritis should be, as at 2004 be [sic] seen to be a disease that was caused or aggravated during the course of [Mr Kyle’s] employment, either by way of general work duties or by incidents to which [Mr Kyle] refers in 1990 and 1993.”
Mr Wolf has not submitted that the Arbitrator’s approach, or his understanding of the way the parties’ cases were developed in submissions, was incorrect.
The Arbitrator said (at [39]) that he believed the bulk of the evidence established, or the parties seemed to accept, the following factual positions:
(a)     Mr Kyle suffered a frank injury on 10 December 1985 involving his left knee;
(b)     in that injury, Mr Kyle suffered a partial tear to his left medial meniscus;
(c)     Mr Kyle suffers from osteoarthritis in his left knee;
(d)     osteoarthritis is a disease of gradual process, (but) the question was “causation”;
(e)     Mr Kyle suffered an aggravation of the disease in 2003;
(f)      Mr Kyle needs a total left knee replacement, and
(g)     the need for the left knee replacement arises from the osteoarthritis.
The appellant has not challenged any of these findings. It submitted that it did not concede (at the arbitration) that the 1985 injury caused a partial tear of the left medial meniscus. In the absence of a challenge to the Arbitrator’s finding on that issue, which was well supported by the evidence and is discussed further below, the relevance of that submission is unclear.
The above analysis demonstrates that the nature of the injury in 1985, and its consequences, which the Arbitrator found to include the 1994 surgery and the subsequent development of osteoarthritis, assumed considerable importance in the Arbitrator’s assessment of causation and apportionment.
The Arbitrator was satisfied that the proposed left knee replacement surgery was and is reasonably necessary. The appellant has not challenged this finding. He then asked whether the need for the surgery arose from “disease based on nature and conditions or the disease subsequent upon the effects of the frank injury in 1985?” He then set out a detailed summary of the medical evidence from Drs Bodel, Smith, Chan, Pillemer and Breit. Mr Wolf has not suggested that that summary was inaccurate.
Consistent with Mr Wolf’s submissions on appeal, the Arbitrator noted the evidence from Drs Pillemer, Bodel, and Chan to the effect that Mr Kyle has osteoarthritis in his knees that has been aggravated by the nature and conditions of his employment after 1985. He said that Dr Smith, orthopaedic surgeon qualified by Cambridge, was “on his own” in his view that Mr Kyle’s condition was not work-related at all and that Dr Smith did not address the distinction between the effects of the 1985 injury and the nature and conditions of work since that time. These conclusions about Dr Smith’s evidence have not been challenged and were clearly correct.
While the Arbitrator’s summary of the medical evidence was accurate, Mr Wolf’s submissions were not. Mr Wolf’s reference to Dr Bodel recording a “flare up” following a further incident following which Mr Kyle underwent arthroscopy and a further “significant” increase in symptoms in 2003 was not a fair summary of the evidence.
Dr Bodel’s reference to a “flare up” is found at paragraph three of his report of 1 December 2005, which reads:
“Throughout the calendar year of 1987 he had recurring troubles with his back. This area was first injured when he was lifting an oven belt guard. He was off work and had medication and physiotherapy and he recovered reasonably well. He had another flare-up of symptoms lifting a heavy machine with others at work and a further occurrence when guiding a large soup tank. He settled with physiotherapy on each occasion but never completely recovered. Hydrotherapy was also helpful.” (emphasis added)
It is tolerably clear that Dr Bodel’s reference to a “flare up” in this paragraph was to Mr Kyle’s back troubles, not his knee.
Dr Bodel’s next paragraph referred to Mr Kyle having risen to the position of a supervisor and coping reasonably well with that. However, as he wanted to reduce his hours, Mr Kyle relinquished his supervisory role and went back to work as an operator and that further aggravated his back and knees. Dr Bodel then said that Mr Kyle had a “significant” increase in knee pain in November 2003. He saw his doctor and was referred to Dr Caldwell, orthopaedic surgeon, and eventually had a hemiarthroplasty on his right knee on 22 March 2004. Dr Bodel also referred to Mr Kyle having had an arthroscopy on his left knee.
When Dr Bodel’s two paragraphs are read together, it is clear that Mr Wolf has blended two separate matters, namely, the “flare up”, which related to Mr Kyle’s back symptoms, and the increase in knee pain, in a way that was misleading.
The Arbitrator then considered whether the need for the proposed left knee surgery was as a result of a work-related injury and, if so, which injury. His analysis of this issue started by stating that he accepted Dr Breit’s analysis “as to the probable mechanism of [the 1985] injury”. He found (at [68]), consistent with his earlier finding (at [39]), that the 1985 injury produced a partial tear of the left medial meniscus. This finding was open on the evidence and was a significant factor in the Arbitrator’s ultimate determination on apportionment.
The Arbitrator’s further reasons may be summarised as follows:
(a)     dealing with the period between 1985 and 1994, the Arbitrator expressly noted (at [70]) that “[b]etween 1985 and the arthroscopies in 1994” Mr Kyle complained of two “incidents” (in 1990 and 1993) during which he experienced increased symptoms;
(b)     dealing with the need for the proposed left knee surgery, the Arbitrator accepted (at [71]) the submission by counsel for Cambridge that that need was a result of the 1985 injury to the left knee and the “secondary effects of the surgery” in 1994, which surgery was “directed to the consequences of the 1985 injury”;
(c)     in reaching this conclusion, the Arbitrator relied “considerably on the analysis of Dr Breit … to the effect that the 1985 injury involved the medial compartment, resulted in partial medial meniscectomy in 1994, with literature overwhelmingly showing that this (ie, meniscectomy) leads to medial compartment arthritis” ([71]);
(d)     additionally, the Arbitrator noted (at [72]) the “description of incidents in which [Mr Kyle] injured his knees on numerous occasions” and that those incidents were “indicative of the nature of the duties that [Mr Kyle] undertook over a long period of time”. Those activities were capable of placing stresses and strains on the knees and the “nature of [Mr Kyle’s] employment from 1985 to 2004 was employment that was a substantial contributing factor to the aggravation, acceleration or deterioration of the disease of osteoarthritis”, and
(e)     in so far as there was a “‘nature and conditions of employment’ claim[,] it ought be considered as being an aggravation of a disease within the meaning of section 16 of the 1987 Act” ([75]).
Based on the above reasoning, the Arbitrator concluded (at [76]) that the need for the proposed left knee surgery and the 2011 incapacity resulted from “both the frank injury in 1985 and the aggravation of the disease or [sic, of] osteoarthritis with a deemed date of injury in 2004”. He added, at [77]:
“77.Although I have found the disease to be the reason that surgery is required, I find that the osteoarthritis is the result of the frank injury in 1985 and the subsequent meniscectomy in 1994 attributable to it. I also find that the aggravation by employment up to 2004 remains a substantial contributing factor.”
Consistent with Australian Conveyor Engineering Pty Ltd v Mecha Engineering Pty Ltd [1998] NSWCA 51; (1998) 45 NSWLR 606, the Arbitrator correctly observed that apportionment may be made between a frank injury and an injury by way of aggravation of a disease.
The Arbitrator noted (at [79]) the submission by Mr Kyle’s counsel (which was generally consistent with the submission Mr Wolf has made on appeal) that it would be artificial to apportion any part of Mr Kyle’s current presentation to the frank injury in 1985, as it was clear that it was a disease case and that there had been a series of events by way of mini traumata between now and then. While the Arbitrator accepted the second part of that submission, he did not believe “the causal chain has therefore been completely overtaken by any aggravations suffered”.
The Arbitrator said, at [80]:
“80.Doing the best I can, and in considerable reliance on the analysis of Dr Breit, I conclude that the need for surgery arises from a contribution of 70 per cent due to the 1985 injury and 30 per cent from the aggravations suffered between 1987 and 2004. I have considered the lengthy period involved, but given the initial disruption of the left medial meniscus and the substantial effects of the surgery resulting from it, the majority of the contribution remains, in my view from the effects of that injury.”
He added (at [81]) that there was no reason to treat the contributions to incapacity differently.
The above analysis demonstrates that the Arbitrator not only considered the factual and medical evidence that Mr Kyle’s duties constituted an aggravation of the disease, but also accepted that to be so.
The submission that the Arbitrator failed to give proper consideration to the significant weight Mr Kyle placed on the contribution of his employment between 1985 and 2004 was not supported by any reference to the evidence. Mr Kyle’s statement was particularly brief and provided limited, if any, assistance on the issue of apportionment. He did not say he placed “significant weight” on his 20 years of employment. He said he stopped work “[d]ue to [his] injuries”. It will be recalled that he suffered several injuries in the course of his employment with Sanitarium.
The submission that the Arbitrator disregarded the period between the 1985 injury and the increased symptoms that led to the surgery in 1994 was incorrect. The Arbitrator expressly referred to the 1990 and 1993 incidents. He also referred to the undated employer’s report of injury form (presumably prepared in 1994) that referred to torn cartilages in both knees in 1985 (see [48] above), and to Dr O’Keefe’s reference to Dr Laird’s provisional diagnosis (in 1986) of a torn cartilage and Dr O’Keefe’s evidence (in 1994) that Mr Kyle had a degenerative meniscal tear that had “almost certainly been present since 1986 [sic, 1985]” (see [46] above).
The evidence in the preceding paragraph, taken with Dr Breit’s evidence that “the mechanism of injury [in 1985] is most likely to have resulted in medial meniscus tears because it is in the squatting position that the posterior horn of the medial meniscus catches”, to which the Arbitrator referred at [66], provided a sound basis for his conclusion that Mr Kyle suffered a tear of the medial meniscus in the 1985 injury. Clearly, the 1985 injury caused significant damage to and pathology in the left knee. The subsequent incidents and “nature and conditions of employment” caused an unidentified “aggravation”.
I do not accept that the Arbitrator failed to address the impact of the injuries subsequent to the 1985 injury. He expressly accepted (at [79]) the submission that Mr Kyle suffered a “series of events by way of mini-traumata between now and then” (that is, between 2004 and 1985), but did not accept that “the causal chain” (in respect of the 1985 injury) had been completely overtaken by any aggravations suffered. Given the evidence that Mr Kyle never fully recovered from the effects of the 1985 injury, though he did return to his usual duties, and given the finding as to the nature of the injury received in 1985, that finding was open.
The submission that Dr Breit’s opinion is “flawed” was not a submission made at the arbitration and the appellant has advanced no reason why it should be permitted to rely on that argument on appeal. It is appropriate to repeat, yet again, the observations of the High Court in University of Wollongong v Metwally (No 2) (1985) 59 ALJR 481 at 483, that:
“It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.”
An attack on Dr Breit’s evidence of the kind now made on appeal could easily have been met with additional evidence from Dr Breit. It is therefore not open to make such an attack on appeal. Moreover, it is not open to establish error by relying on a point never argued before the Arbitrator (Brambles Industries Ltd v Bell [2010] NSWCA 162 at [22] and [30]; 8 DDCR 111). However, as the respondents have not objected to the point being raised, and as it gives rise to no prejudice to them, I will deal with it.
While it is correct that Dr Breit took a history that there were no other trauma episodes as far as the knees were concerned, he added that he based his assessment on the history, clinical findings and investigations “in conjunction with an assessment of the other reports and documents”. Those other reports included Dr Bodel’s report of December 2005. Dr Breit quoted Dr Bodel as saying that the pathology in Mr Kyle’s knees was “associated with various episodes of injury that occurred at work”.
What is required for satisfactory compliance with the principles governing expert evidence is for the expert’s report to set out “the facts observed, the assumed facts including those garnered from other sources such as the history provided by the appellant, and information from x-rays and other tests” (Hancock v East Coast Timber Products Pty Ltd [2011] NSWCA 11; 8 DDCR 399, per Beazley JA (as her Honour then was) (Giles and Tobias JJA agreeing) at [85] (Hancock)).
When Dr Breit’s report is read in its proper context, it is clear that it complied with the test in Hancock and that it provided a fair climate for the acceptance of the opinion expressed. Moreover, as discussed above, Dr Breit’s evidence was not the only (or even the main) evidence of the nature of the 1985 injury.
The more important part of Dr Breit’s opinion was his statement that the “overwhelming evidence” over many decades showed “that following medial meniscal excision there is significant alteration in the biomechanics of the knee and significantly increased risk of medial compartment osteoarthritis”. If there were any doubt about his opinion, he added that the medical literature “overwhelmingly shows that [a partial medial meniscectomy] leads to medical [sic] compartment arthritis”. Only Dr Smith expressed a contrary opinion and, for reasons stated, the Arbitrator rightly rejected that opinion.
It follows that the Arbitrator’s acceptance of Dr Breit’s evidence as to the nature of the 1985 injury, the significant consequences of that injury, namely, the need for the 1994 surgery and the subsequent development of osteoarthritis, was open to him and disclosed no error.
I do not accept the submission that the Arbitrator gave no reasons or no satisfactory reasons for why he accepted Dr Breit’s evidence “as to causation” over the other evidence that specifically addressed “the issue of liability for the need for treatment”. The evidence from Drs Pillemer, Bodel and Chan merely established that Mr Kyle suffered an aggravation injury, something the Arbitrator accepted. That did not diminish the evidence of the effect of the 1985 injury and the 1994 surgery and did not address Dr Breit’s evidence that such surgery leads to medial compartment arthritis.
Significantly, none of the expert evidence addressed the question of apportionment. Neither did Mr Niven’s submissions to the Arbitrator. He argued that the whole of the liability had to fall on Cambridge. The Arbitrator rightly rejected that argument. It flew in the face of persuasive evidence, which the Arbitrator accepted, that Mr Kyle suffered a medial meniscal injury in 1985, that the surgery in 1994, which Allianz Australia paid for, was required to treat that injury, and, most important of all, that that surgery led to osteoarthritis in Mr Kyle’s knee which is why he now needs the proposed knee replacement operation and, to a large extent, why he has been incapacitated since 2011.

An Arbitrator’s obligation to give reasons depends on the circumstances of the individual case (Mifsud v Campbell (1991) 21 NSWLR 725 at 728 per Samuels JA (Clarke JA and Hope AJA agreeing)). Mr Niven submitted at the arbitration that Mr Kyle’s condition was “attributable to the disease provisions which shoots liability home to the last employer” (this was clearly intended to be a reference to the last insurer) (T22.13) and, at T22.51, that:
“you would not make an artificial apportionment of liability between the frank incident and a disease process in circumstances where the weight of the medical evidence, in our submission, repeats ad nauseam the number of frank incidents and the nature and conditions of this gentleman's employment well into the 2004 period, years and years after - almost two decades after what was described as the 1985 injury.
And that the purpose of the disease provisions being there are to solve this sort of dilemma, and that’s the spirit of the legislation and that’s the way, in our submission, you would treat the matter. That’s all I have to say.”
This did not address apportionment. On appeal, Mr Wolf has properly conceded that the Arbitrator was entitled to apportion between the 1985 frank injury (the s 4(a) personal injury) and the aggravation injury (the aggravation of the disease of osteoarthritis under s 4(b)(ii)). Given this concession, Mr Niven’s insistence that the disease provisions “shoot liability home to the last employer” was unhelpful. If it suggested that apportionment was not available, it was wrong.
Mr Niven’s approach to the apportionment issue, namely, that all liability fell on Cambridge, left the Arbitrator to determine that question as best he could. Given the state of the evidence, where no doctor expressed an opinion on apportionment, and given the approach taken by counsel, the argument that the Arbitrator failed to give “satisfactory” reasons is unsustainable. The Arbitrator exposed his reasoning on the critical issues in dispute and articulated the essential ground on which he based his decision (Soulemezis v Dudley (Holdings) Pty Ltd (1987) 10 NSWLR 247 per McHugh JA at 280). Those reasons were adequate in the circumstances.
Mr Niven’s submissions did not distinguish between apportionment of liability for the cost of the proposed surgery and liability for the weekly compensation. In these circumstances, and for the reasons explained below, it was open to the Arbitrator to apply the same apportionment to both claims.
The Court of Appeal considered the apportionment of weekly compensation in Sutherland Shire Council v Baltica General Insurance Co Ltd & Ors (1996) 12 NSWCCR 716 (Baltica). Clarke JA said the insertion of section 22(1A) had widened the meaning of the expression “results from more than one injury”. Once it was accepted that Mr Kyle’s incapacity resulted from more than one injury, as the Arbitrator clearly accepted, the test to be applied was explained by Clarke JA at 730G–731B:
“...I do not think there is any impediment to my acceptance of the view that the common law test applies and that the relevant enquiry directs attention to whether the injury caused or materially contributed to the incapacity. Accordingly, the approach evident in Morris v George, which reflected the restrictions imposed by the search for a proximate cause or direct cause, should, in my view, no longer be regarded as sound.”
The appellant’s submissions on appeal, which have emphasised the fact that Mr Kyle worked for many years after the 1985 injury, rely very heavily on the proximate cause or direct cause approach. That approach was expressly rejected in Baltica. It is also inconsistent with Kooragang Cement Pty Ltd v Bates (1994) 35 NSWLR 452; 10 NSWCCR 796 where Kirby P (as his Honour then was) said at 463–4:
“The result of the cases is that each case where causation is in issue in a workers compensation claim, must be determined on its own facts. Whether death or incapacity results from a relevant work injury is a question of fact. The importation of notions of proximate cause by the use of the phrase ‘results from’ is not now accepted. By the same token, the mere proof that certain events occurred which predisposed a worker to subsequent injury or death, will not, of itself, be sufficient to establish that such incapacity or death ‘results from’ a work injury. What is required is a commonsense evaluation of the causal chain. As the early cases demonstrate, the mere passage of time between a work incident and subsequent incapacity or death, is not determinative of the entitlement to compensation. In each case, the question whether the incapacity or death ‘results from’ the impugned work injury (or in the event of a disease, the relevant aggravation of the disease), is a question of fact to be determined on the basis of the evidence, including, where applicable, expert opinions.”
The Arbitrator’s apportionment of liability involved his assessment of the (unsatisfactory) medical evidence with limited, if any, assistance from counsel. That involved a choice or discretion, “as to which there may well be differences of opinion” (Podrebersk v Australian Iron and Steel Pty Ltd (1985) 59 ALR 529 at 532 (Podrebersk)). Moreover, as noted by McHugh JA (as his Honour then was) in Phillis & Anor v Daly (1988) 15 NSWLR 65 (at 78) in a passage quoted with approval in Podrebersk, “appellate courts are reluctant to interfere with an assessment of responsibility unless the judge has acted upon some wrong principle or the apportionment is manifestly erroneous”.
Though these authorities dealt with appeals from apportionment of liability in common law claims for damages, the same principles apply to apportionment of liability under s 22A, which provides that apportionment of liability between insurers is to be on the basis of the relative length of the employer’s period of insurance with each insurer concerned during which the worker concerned was employed by the employer, or “on such other basis as the Commission considers just and equitable in the special circumstances of the case” (s 22A(1)(b)). I note that the parties did not refer to s 22A(1), either at the arbitration or on appeal.
In the present case, though Mr Kyle has a number of work related conditions, the claim was based on the condition of his left knee. His unchallenged evidence was that he has continuing pain and disability in that knee, which Dr Breit noted has slowly increased. That pain is undoubtedly due to the osteoarthritis in his knee, which has resulted from the combined effect of the 1985 injury, the various aggravations that occurred after that injury and the surgery in 1994.
Having regard to the significant injury in 1985, which led to the surgery in 1994, and to unchallenged evidence from Dr Breit that such surgery leads to medial compartment arthritis, and noting the lack of expert evidence on apportionment, the Arbitrator’s finding that Allianz Australia was 70 per cent liable for the weekly compensation was, in the special circumstances of this case, well within the discretionary range for such matters and disclosed no error.
Indeed, it may have been arguable that, given the nature of the injury in 1985 and its significant consequences, namely, the development of osteoarthritis, Allianz Australia’s liability should have been more than 70 per cent (see Lyons v Master Builders Association of NSW Pty Ltd (2003) 25 NSWCCR 422). However, as Cambridge did not present such an argument it is not necessary to express a view about it.
There was nothing artificial about that finding. The relevant incapacity resulted from the pain in the left knee, that pain is due to the osteoarthritis in the knee, that osteoarthritis is due, to a very large extent, to the injury in 1985 and the consequential surgery in 1994. The Arbitrator’s conclusion was perfectly logical and consistent with the evidence. That he did not spell out his reasoning in full with respect to the weekly compensation claim is of no consequence. The essential ground for his decision is clear from a reading of his decision as a whole. It is not an error of law to omit to state expressly a finding that is clear on a fair reading of the decision (Polglaze v Veterinary Practioners Board of NSW [2009] NSWSC 347 at [56]).
As observed by Kirby J in Roncevich v Repatriation Commission [2005] HCA 40, 222 CLR 115 at [64], appellate courts should avoid an “overly pernickety examination of the reasons”. His Honour added that “[t]he focus of attention is on the substance of the decision and whether it has addressed the ‘real issue’ presented by the contest between the parties”. When one does that, the Arbitrator’s reasoning is clear and compelling.

CONCLUSION

The appellant has not established that the Arbitrator’s decision is affected by any error of fact, law or discretion. Its case simply did not address apportionment. It chose to rely on the disease provisions in circumstances where the 1985 injury played a significant role in the development of Mr Kyle’s osteoarthritis, the very thing that has brought about the need for the proposed surgery and has, largely, caused his incapacity.

DECISION

The Arbitrator’s determination of 31 January 2014, as amended on 28 February 2014, is confirmed.
The matter is remitted to the Arbitrator for determination of all outstanding issues.

COSTS

The appellant, Allianz Australia Insurance Ltd, is to pay the respondents’ costs of the appeal, as agreed or assessed.

Bill Roche
Deputy President

21 May 2014

I, JACQUELINE HAGGER, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF BILL ROCHE, DEPUTY PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE