Canute v Comcare

[2006] HCATrans 246

[2006] HCATrans 246

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
  Sydney  No S20 of 2006

B e t w e e n -

KENNETH CANUTE

Applicant

and

COMCARE

Respondent

Application for special leave to appeal

GLEESON CJ
CALLINAN J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 19 MAY 2006, AT 11.43 AM

Copyright in the High Court of Australia

MR L.T. GREY:   If it please the Court, I appear for the applicant.  (instructed by Carroll & O’Dea)

MR P.J. HANKS, QC:   If the Court pleases, I appear with, MR B.H.J. DUBE, for the respondent.  (instructed by Phillips Fox)

GLEESON CJ:   Yes, Mr Grey.

MR GREY:   Your Honours, this application raises two short what I might call primary and secondary issues of statutory construction concerning the assessment of permanent impairment compensation under two different Acts, although only one was concerned in this case, the Safety, Rehabilitation and Compensation Act 1988, and the issue arises from what are frequently encountered set of facts, and they are maybe stated simply as follows.

The applicant suffered a physical injury.  It resulted in a permanent physical impairment which exceeded 10 per cent of the whole person.  That entitled him to lump sum compensation under the Act which was paid.  The physical injury later caused a secondary psychological disorder which also answered the description of “injury” in the Act.  That psychological injury also then resulted in a permanent impairment amounting to 10 per cent of the whole person.

So the issue of principle is, is the psychological impairment to be treated under section 24, which is the permanent impairment section, as resulting from the psychological injury and then assessed accordingly, or is the psychological injury, as the Full Court found, to be treated as simply another impairment arising from the earlier physical injury.

The consequences of adopting the first course, which we contend for, that is, treating the psychological injury as a stand alone injury, is that the applicant becomes immediately entitled on the facts which are not in dispute in this case to a lump sum compensation amounting to 10 per cent of the whole person, and we say that is the correct approach.

GLEESON CJ:   What does “10 per cent of the whole person” mean?

MR GREY:   There is under section 24 a maximum amount which can be awarded in compensation.  It is about $137,000.  When compensation is assessed it is assessed by reference to a guide under section 28 of the Act.  The guide sets out a series of criteria by which the compensation is graded in terms of percentage.  In the psychological table it sets out a number of factors which then – in fact they are referred to in the Full Court judgment.  If your Honours wish, I can take your Honours to it.

GLEESON CJ:   Do not spend any particular time on this, Mr Grey, at the cost of your other argument.

MR GREY:   Perhaps I will just say shortly, your Honour, for example, 10 per cent under the psychological table is defined this way:

Despite the presence of MORE THAN ONE of the following [the person] is capable of performing activities of daily living without supervision or assistance.

.reactions to stressors of daily living with minor loss of personal or social efficiency

.lack of conscience directed behaviour without harm to community or self

.          minor distortions of thinking

So if it is found that that applies as a result of the psychological injury then the table directs a particular percentage.  That percentage is then multiplied by the maximum amount under the Act and thereby converted to a sum of money.

Now, the consequence of adopting the course of treating the psychological injury as an impairment arising from the earlier physical injury, as the Full Court decided was the correct construction of the Act, is that then one has two impairments, one physical, one psychological, resulting from the single physical injury occurring at different points in time.

The Act mandates that where impairments result from a single injury the calculated whole person impairments referrable to each impairment do not simply get added together but get combined under a table, 14.1, which is one of the tables under the Comcare guide.  The effect of table 14.1 is that in every case where you add 10 per cent – in this case due to a psychological injury – to a pre‑existing impairment the amount which is added is not 10 per cent but usually 9 or sometimes 8, depending on how big the prior impairment was.  So you would never be adding 10 per cent.

The significance of that arises in the secondary or subsidiary construction issue that we raise.  The majority of the Full Court treated the earlier physical impairment assessment as a final assessment of the employee’s degree of impairment, such that section 25(4) of the Act applied.  Now, that section, your Honour, can be found in the application book in the judgment of the Full Court at page 65.  Essentially what that subsection says is:

Where Comcare has made a final assessment of the degree of permanent impairment of an employee (other than a hearing loss) no further amounts of compensation shall be payable to the employee in respect of a subsequent increase in the degree of impairment, unless the increase is 10% or more.

So the majority of the Full Court treated the prior assessment of the physical impairment as if it were a final assessment.  They said that brought section 25(4) into effect, therefore the applicant could not get any further compensation of a lump sum nature unless he could demonstrate at least 10 per cent whole person impairment, but because of the application of the combined value table he could never get that, therefore he could not qualify for compensation.

GLEESON CJ:   What was the point of departure between the reasoning of Justice Gyles and the reasoning of the majority?

MR GREY:   Justice Gyles said Justice Hill was correct in finding that the Tribunal erred in failing to look at the question of whether the psychological injury was a separate injury and then treatable separately and he said that the majority of the Full Court erred, or he did not agree with the majority of the Full Court, in taking the view that there had been a final assessment of the psychological impairment.  His Honour said there has been no assessment of the psychological impairment, there has only been an assessment of the physical impairment, so therefore 25(4) would be irrelevant.

GLEESON CJ:   We have a division of opinion within the Federal Court between Justice Hill and Justice Gyles, on the one hand, and Justices French and Stone on the other.

MR GREY:   Yes.  There are some other decisions too where there are obiter views which would be inconsistent with the Full Court decision.

GLEESON CJ:   But what I would like to understand for myself is a difference of opinion about what.  What kind of a difference of opinion is it?  Is it just a difference of judgment?

MR GREY:   No, it is a difference of opinion about how the question of causation applied to permanent impairment is to be addressed.  The Full Court set out a series of steps which they said must be followed as a matter of law, and those steps included looking at the question of whether a consequential injury was equal to an impairment.  We say a consequential injury can never be an impairment.  Injury and impairment are two different concepts completely.  So the Full Court has said that you can treat an injury as if it were an impairment. 

Now, that appears to be a point of departure between the majority of Justices on the Full Court and Justice Hill and Justice Gyles as well as the question of how one applies section 25(4).  In other words, what does a final assessment mean?  The position advanced before the Full Court, and accepted as far as we can tell, is that a final assessment simply means an assessment under section 24.  So in this case Mr Canute applied for physical impairment compensation.  That is all he asked for initially.  An assessment was made of that impairment and he was paid some money. 

Now, no assessment had been made at that stage of any psychological issue.  It simply had not arisen.  When it did arise and was considered, is that a permanent impairment?  Well, Justice Gyles took the view – and with respect we agree – that that is not a final assessment in relation to that impairment because that impairment had never been the subject of any consideration previously, interim or otherwise. 

Justice Gyles referred to section 25(5) of the Act – and that is also reproduced in the application book – no, it is not, I take it back, your Honour.  Section 25(5) I should read out to your Honour.  I am sorry if your Honours do not have this.  It makes the point – there are special rules relating to hearing loss, that is to say, the 10 per cent which applies to any other kind of impairment for the purposes of section 25(4).  In other words, if there has been a final determination and one wants to come back later and apply for more, one has to get at least 10 per cent.  With hearing loss the threshold is lower.  It is 5 per cent, and section 25(5) says:

If Comcare has made a final assessment of the degree of permanent impairment of an employee constituted by a hearing loss, no further amounts of compensation are payable to the employee in respect of a subsequent increase in the hearing loss, unless the subsequent increase in the degree of binaural hearing loss is 5% or more.

Now, the point of that, as Justice Gyles pointed out, was that the section appears to be treating the increase as referrable to a single kind of impairment.  It is not looking at the question of the totality of the impairment of the individual. 

The view of looking at the totality was raised in another case – a case called Mihajlovic – which was referred to in the judgments in this case, but has not been the subject of a Full Court decision, or of course a decision of this Court.  So that that issue remains uncertain, we say.  We say that Justice Gyles was correct in the view his Honour took of it and, in substance, your Honour, the central contentions we make about the main point, that is, should the psychological injury be treated separately to the physical injury, we say the following things in summary.

The Act itself distinguishes between physical and mental injuries, and in the definition of “injury” it talks about physical or mental.  It assumes, we say, that they are different.  So when one looks at a commonsense evaluation of the causal chain, we submit that you could not find that a physical injury results directly in a psychological impairment.  You must go through an intermediate step, that is, you must find that there is a psychological injury which then results in a psychological impairment. 

In fact that is what happened in this case that the Tribunal found that there was an adjustment disorder which meant that there are certain criteria under DSM‑4 Psychological Manual used by psychiatrists.  So there was a finding that there was a psychological disorder.  All of the members of the Full Court accepted that was an injury for the purpose of the Act.  This next point we make, your Honours, is that the Act does not distinguish between original and consequential injuries.  There are simply differences between physical and mental, but the Act does not say you treat the injury differently if it is a consequence of another injury.

There was in this case no dispute in the end that the psychological injury was causally connected to the workplace.  It was a compensable injury in itself and, indeed, treating the injuries the same, whether they are integral or consequential, we submit must be correct because the opposite result would produce anomalies where, for example, a psychological injury arose from the same incident as the physical injury.

Now, in that case there does not seem to be a dispute that they would be two separate injuries and they would be assessed separately and you would simply add together the permanent impairment compensation and you would not apply the combined value table, or section 25(4), but in the case where the psychological injury, otherwise identical, arose from the physical injury, it has been contended by the respondent that you do add them together using the combined value table and that would have the effect in this case that the applicant would receive no compensation.  So it would make quite a difference to him and to those like him who have that consequential psychological injury dependent upon the earlier physical injury. 

We say, thirdly, that injury cannot simultaneously be an impairment.  The Act treats the two things as different.  Section 24(1), for example, says the linkage, if you like, between injury and impairment is this:

Where an injury to an employee results in a permanent impairment, Comcare is liable to pay compensation to the employee in respect of the injury.

Now, the two concepts are different.  When one examines the Act we say the term “injury” which has its ordinary meaning, it is not specifically defined other than in the case of disease to be an ailment, a morbid physical or mental disorder, but the concept of impairment is defined.  Your Honours will find that definition referred to by the Full Court at page 64:

impairment means the loss, the loss of the use, or the damage or malfunction, of any part of the body or of any bodily system or function or part of such system or function.

So we say that impairment means essentially the loss of function or damage to the function.  That is not the same as injury.  One could have an injury, for example, that results in no loss of function.  It may even be permanent.  An example, if one were to break a leg and have a bone‑knitting anomaly that was detectable by x‑ray or bone scan that is permanent, it would not necessarily result in any difficulty walking, or it may not, in which case there would be an injury which is permanent but no impairment.  So we say you cannot simply treat “injury” as a synonym for “impairment” or vice versa. 

The fourth point we make about the primary point is that the Full Court placed weight upon the concept that the 1988 Act which replaced an earlier Act enacted in 1971 had changed the permanent impairment provisions from a system based upon a table of memes where there were losses of use attributable to particular limbs or parts of the body to a concept where losses of function were assessed as a percentage of the whole body.  So, for example, damage to a joint was not assessed as a loss of efficient use of a leg but was assessed by reference to what effect it had on the functioning of the whole individual. 

The Full Court took the view that that meant that one should in every case then apply a whole person approach to the question of impairment and that favoured an approach where the psychological injury was treated merely as an impairment flowing from the physical injury in this particular case.  We say it did not really support that conclusion.  It simply distinguished the approach taken under this Act from the previous Act. 

The Act itself still requires that there be an assessment done injury by injury, that is, the Act refers to an impairment arising from an injury and treats them that way.  If more than one impairment arises from more than one injury, they can be combined under the guide but they do not otherwise

get treated as if one was an impairment of the other.  Your Honour, I note the time.  Those are my submissions.

GLEESON CJ:   Yes, thank you, Mr Grey.  Yes, Mr Hanks.

MR HANKS:   Thank you, your Honour.  We do not dispute that there is a very short point at the core of this case and the point comes out of the principal provisions of the Act which create liability in the Commonwealth, or should I say in Comcare, to pay compensation.  Your Honours, these provisions are set out in the judgment of the majority in the Full Court and they can be found at page 63 of the application book.  The critical provision is section 14(1):

Comcare is liable to pay compensation in accordance with this Act in respect of an injury suffered by an employee if the injury results in –

and then there are, as your Honours see, three alternative consequences, one of which is impairment.  So immediately the Act sets up, as it were, a direct causal relationship between the injury on the one hand and impairment on the other.  That is elaborated in section 24 which commences at the bottom of page 64, or at least the heading to the section is placed there, and subsection (1) is the critical provision.  Again:

Where an injury to an employee results in –

again, that direct causal relationship –

a permanent impairment Comcare is liable to pay compensation to the employee in respect of the injury.

And then there follow detailed provisions in section 24 setting out the process by which that compensation is to be assessed and calculated.  There is a maximum amount, for example.  As my friend said, it was originally set at $80,000 in subsection (9).  It has been indexed to around about $137,000.  If one is making an assessment, one uses what is described as the approved guide.  That is the consequence of subsection (5), you must apply the approved guide.  Applying the approved guide you work out the percentage of the maximum amount.  There are tables in the approve guide which set out percentages of impairment, and ultimately you arrive at a figure.

One of the limitations is that which appears in subsection (7).  When doing that assessment no compensation will be payable under section 24 unless the impairment comes to at least 10 per cent, and it is certainly possible under the approved guide to come to a figure less than 10 per cent in respect of an impairment.  There are figures of 5 per cent, for example, in relation to certain parts of the body.  That is a significant limiting factor and it is a limiting factor that could and would be avoided if the approach adopted by the majority in this case were to be applied.  That is the approach adopted by the majority would have an ameliorating effect and would allow employees who have more than one impairment resulting from an injury to have those impairments combined, even though each of them is less than 10 per cent and therefore to receive compensation under this provision.

Now, your Honours, what the majority said in the Full Court was, as we read it, that the concepts of injury and impairment as used in the Act do to some extent overlap.  That overlap can be seen most clearly where the injury in question is of a particular species.  The Act recognises two species of injury:  injury other than a disease and disease.  Disease itself is then defined by reference to another term “ailment”, and the majority of the Full Court said in circumstances where you have an ailment, such as adjustment disorder, which is consequential upon or caused by an initial injury such as here, the back injury, you can say of that consequential injury which is compensable under this Act that it is also an impairment.

If that be the case – and that is a question of fact to be determined from case to case – if the consequential injury is indeed an impairment, then both section 14 and section 24 come into operation and they require that the employee be paid compensation for that resulting impairment, and as a resulting impairment it is to be dealt with under section 24 and it is to be assessed together with the initial impairment, or should I say with the impairment resulting from the initial injury.

That, their Honours said, has the distinct advantage – indeed it is a result, their Honours concluded, which is demanded by aspects of the legislation – has the distinct advantage of serving particular purposes of the legislation.  In particular, it serves the purpose of ensuring that any assessment of impairment is a whole person assessment, that it is not done piecemeal, impairment by impairment, that the effect on the person’s whole body is taken into account.

It also has the consequence of ensuring that the limitations on maximum compensation – and I have taken your Honours to section 24(9) – of ensuring that those limitations on compensation are not avoided by allowing each item of impairment to be assessed separately, so that potentially an employee can double dip into that pool that is fixed by section 24(9).

Now, in the present case their Honours concluded – and I am here referring to the majority judgment – the adjustment disorder, although it was undoubtedly an ailment as defined in the Act – and your Honours will find those definitions in section 4 of the Act.  They are reproduced commencing at the bottom of page 63.  Although the adjustment disorder is properly characterised as an ailment because it is a mental disorder – and that is one of the sub‑species of “ailment” ‑ it is also properly classified as an impairment because it involves the malfunction of any bodily system or function and because it is capable of being – and indeed should be classified in that way, in those two ways – because it can be treated and should be treated as an impairment as well as an injury and because it has already been concluded that the adjustment disorder was a consequence of or resulted from the initial injury, it does not give rise to a separate or discrete head of liability.

GLEESON CJ:   What was the point of departure of Justice Gyles?

MR HANKS:   Your Honour, Justice Gyles’ judgment is very short ‑ ‑ ‑

CALLINAN J:   But he substantially agreed with Justice Hill, did he not?

MR HANKS:   Yes, that is right, and neither Justice Hill nor Justice Gyles considered, in our submission, the analysis that was offered by the majority, that is, the analysis that under this Act there is not a sharp distinction.  There is a potential overlap between on the one hand an injury, particularly an injury that is constituted by a disease being an ailment, and on the other hand an impairment.

CALLINAN J:   One would normally think that ‑ well “ailment” and “impairment” are separately defined, so the legislature thought they were different things, and normally one would expect that an ailment would produce an impairment and that the extent of the ailment would affect the extent of the impairment.  They are different things.

MR HANKS:   The majority say, your Honour – and we, with respect, support their analysis – that in the setting of this Act they are not distinct.  They are different concepts but there will be factual circumstances in which a particular condition, if I can use yet another potentially confusing term, a particular condition will qualify as both or aspects of that condition will qualify as both, and in those circumstances – because we are talking here about a very specific situation where you have an initial injury.  This injury occurred in, I think, 1998, an injury to the spine.

CALLINAN J:   Can I ask you this, following upon the Chief Justice’s question, what is the point of departure between Justice Hill and the majority?

MR HANKS:   Justice Hill said there was a process that the Tribunal had to go through.  It had to decide whether the adjustment disorder was an injury distinct from the spinal problems, the thoracolumbar spine problems.  His Honour said the Tribunal did not decide that question.  That was an essential question that had to be decided.  If that question was decided in the affirmative that it was an injury distinct from the thoracolumbar spine, then it was implicit in his Honour’s approach, and no doubt in Justice Gyles’ approach, that the consequence would be that a separate ‑ ‑ ‑

CALLINAN J:   Justice Gyles would not have sent it back himself.  He said it was so clear ‑ ‑ ‑

MR HANKS:   I do not know whether that is entirely true, your Honour.

CALLINAN J:   He almost said that, did he not?

MR HANKS:   With respect, his Honour did not commit himself on that.

CALLINAN J:   He came fairly close, did he not?

MR HANKS:   No – it might be close, but I do not think there was any commitment on that point.

CALLINAN J:   Paragraph 85.

MR HANKS:  

There is much to be said for the appellant’s contention that the primary Judge ought to have made the relevant finding . . . There is no point in deciding that question as I am in dissent.

He may well have done that, your Honour, though whether that was an issue that was properly before his Honour was another question which I need not at this stage bother your Honour with, but the point of departure appears to be that Justice Hill and Justice Gyles would have assumed that it was essential for the Tribunal to decide this question:  is the adjustment disorder an injury?  The Tribunal had not decided that question.  The Tribunal had simply assumed that it was an impairment which was a result of the spinal problem.  It was necessary, their Honours indicated, to deal with that question.

The majority in the Full Court took a different view.  The critical question, they said, was it was necessary for the Tribunal not to assume that the adjustment disorder was an impairment but, rather, to investigate and answer that question, not to approach it on an assumption that merely because it had a causal relationship or resulted from the spinal problem it was an impairment; rather, they had to decide whether it answered the description of an impairment, and their Honours said it could both answer that description and answer the description of an injury.  If it did answer the

description of an impairment, then immediately it should be treated as an impairment resulting from the initial injury and the compensation payable under section 24 in respect of the adjustment disorder being an impairment should be assessed on that basis.

So we would see that as the point of departure with their Honours recognising the potential for double characterisation or dual characterisation of the consequential adjustment disorder, whereas Justice Hill and Justice Gyles did not.  Now, it is our submission that the majority judgment does no violence to the legislation.  It serves the purposes of the legislation, it is carefully constructed, it offers a well thought out template for decision making under sections 24 and 25, and it ensures in particular, as their Honours put it, that the limitations on payment of compensation impose – under both those provisions, under 24 and 25, together with the insistence on a whole person approach which is embedded in the Act and in the guide are observed.  If your Honours please.

GLEESON CJ:   Thank you, Mr Hanks.  Yes, Mr Grey.

MR GREY:   Your Honours, the point about the Full Court decision was that it sought to treat the injury itself as if it were an impairment, so that an adjustment disorder, it was said, could be an impairment.  An adjustment disorder is merely a diagnosis.  It does not tell one anything about the functional limitations that that imposes on the person who has the adjustment disorder, and that is the difficulty that arises out of that approach.

Implicit in the Act is that there will be a diagnosis – in this case a mental injury diagnosis – which will then have certain consequences for the functioning of the individual.  Those consequences become assessable within the terms of the guide.  The guide cannot be used, I accept, to interpret the Act but it can show how the scheme operates.  The scheme operates on the basis that you identify the mental injury, you assess an impairment that might arise from that according to criteria which are set out in the guide.  The two are quite separate concepts, we would respectfully submit, and that to confuse them or put them together in one to be a subject of a finding based on the fact that there might be some overlap does violence, in my respectful submission, to the scheme that the legislature has put in place.

GLEESON CJ:   This case should take half a day?

MR GREY:   Yes, your Honour, it should not take any longer.

GLEESON CJ:   In this matter there will be a grant of special leave to appeal.  We are going to adjourn for a moment to reconstitute.

AT 12.20 PM THE MATTER WAS CONCLUDED