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…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2014] NSWWCCPD 29
Decision Date: 21 May 2014

CaseChat Overview and Summary

In Allianz Australia Insurance Ltd v Kyle, the dispute involved apportionment between personal injury and aggravation of a disease, with a focus on how to assess medical evidence and whether the insurer failed to provide sufficient reasons for their decision. The case was before the Supreme Court of New South Wales, specifically the Court of Appeal. The court was tasked with reviewing the decision of an arbitrator who had determined the proportion of compensation payable for Mr. Kyle's left knee injury and osteoarthritis, and whether the insurer, Allianz Australia Insurance Ltd, had acted properly in denying compensation for an aggravation of the disease. The court had to consider the principles set out in Hancock v East Coast Timber Products Pty Ltd, particularly the apportionment of liability between pre-existing conditions and work-related injuries.

The court examined whether the Arbitrator had correctly assessed the medical evidence and whether there was an omission in the reasons provided by Allianz Australia Insurance Ltd. It was necessary to determine if the Arbitrator's approach to the apportionment of liability was correct, particularly in light of the gradual nature of osteoarthritis and the difficulty in attributing specific causation. The court also considered the application of the principles from Hancock v East Coast Timber Products Pty Ltd, which require a balanced approach to apportionment in cases of aggravation of a pre-existing condition.

The court confirmed the Arbitrator's determination but remitted the matter back to the Arbitrator to address remaining issues. The reasoning of the court highlighted that the Arbitrator's approach to the evidence was correct, and there was no failure by Allianz Australia Insurance Ltd to provide adequate reasons. The court found that the Arbitrator had appropriately considered the evidence and had not erred in his approach to apportionment. The appeal was dismissed, and the costs of the appeal were to be paid by Allianz Australia Insurance Ltd.

The final orders of the court were that the Arbitrator’s determination of 31 January 2014, as amended on 28 February 2014, was confirmed. The matter was remitted to the Arbitrator for further determination of outstanding issues. Allianz Australia Insurance Ltd was ordered to pay the respondents’ costs of the appeal, as agreed or assessed.

Orders

Orders of the court

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.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

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.