Fleming v NSW Police Force - [2011] NSWWCCPD 33

WORKERS COMPENSATION COMMISSION
REFERENCE OF A QUESTION OF LAW TO THE COMMISSION CONSTITUTED BY THE PRESIDENT
CITATION:		Fleming v New South Wales Police Force [2011] NSWWCCPD 33
APPLICANT:		Eric Fleming
RESPONDENT:		New South Wales Police Force
INSURER:		TMF/Allianz Australia Insurance Limited
INTERVENER:		WorkCover Authority of NSW
FILE NUMBER:		9268/10
DATE OF DECISION:		23 June 2011
SUBJECT MATTER OF DECISION:		Novel or complex question of law; Sch 6 Pt 18C cl 3(2) Workers Compensation Act 1987; method of assessing reduction in compensation for previously non-compensable impairment
PRESIDENTIAL MEMBER:		President Judge Keating
HEARING:		On the papers
REPRESENTATION:		Applicant:	Harris Wheeler Lawyers
Respondent:	Sparke Helmore Lawyers
Intervener:	WorkCover Authority of NSW
ORDERS MADE:		Leave in respect of the first question of law is granted. The answer to the question is: The reduction for any proportion of the permanent impairment found to be a previously non-compensable impairment referred to in Sch 6 Pt 18C cl 3(2) of the 1987 Act is to be effected by a reduction “in the compensation payable”, not by a reduction in degree of whole person impairment. Leave in respect of the second question of law is refused.
COSTS:		(a) As between the parties, the costs of this application be costs in the cause. (b) The WorkCover Authority of New South Wales is to pay its own costs.

BACKGROUND TO THE REFERRAL OF THE QUESTION OF LAW

Mr Fleming is a former serving police officer. He alleges that, whilst serving as an operational officer from 14 February 1995 to August 2007, he was exposed to a series of traumatic events, as a result of which he suffered a disease of gradual onset, namely, post-traumatic stress disorder.
On 10 May 2010, Mr Fleming claimed lump sum compensation pursuant to s 66 of the Workers Compensation Act 1987 (the 1987 Act) in respect of a 21 per cent alleged whole person impairment as assessed by Dr Mark Scurrah on 18 March 2010.
In response to Mr Fleming’s claim, he was assessed at the request of the police force by Dr Brian Potter. Dr Potter assessed him to be suffering from 15 per cent whole person impairment as a result of his psychological condition. A dispute arose between the parties concerning the application of the transitional provisions found in Sch 6 Pt 18C(3)2 of the 1987 Act (the transitional provisions) concerning the reduction in the compensation payable for any proportion of the permanent impairment concerned that is a previously non-compensable impairment.
On 12 November 2010, Mr Fleming filed an Application to Resolve a Dispute in the Commission. He claimed $33,000 in respect of a 21 per cent whole person impairment in respect of “psychiatric/post-traumatic stress disorder” with a deemed date of injury initially identified as 4 November 2005 and subsequently amended by consent to May 2007. Mr Fleming also claimed $25,000 in respect of 50 per cent of the maximum sum payable for pain and suffering pursuant to s 67.
On 2 December 2010, the police force filed a Reply in which it alleged, among other things, that there should be a deduction in the compensation payable in accordance with the transitional provisions in respect of certain events to which Mr Fleming was exposed before the amendments to the 1987 Act (which introduced lump sum compensation for psychological injury) became operational on 1 January 2002.
The dispute concerns the method of quantifying the reduction in the compensation payable for any proportion of the permanent impairment concerned that is a previously non-compensable impairment. Two methods have been applied in various decisions of this Commission and the former Compensation Court.
Under the first method, which for convenience I will call the “reduction by lump sum method”, the following approach is taken:
(a)     a determination is made of the whole person impairment;
(b)     if the impairment found is over 15 per cent (the threshold required by section 65A of the 1987 Act for the payment of lump sum compensation for psychological injury), a determination is made of the lump sum payable in respect of the percentage impairment found;
(c)     if there is a previous non-compensable impairment, a determination is made of the proportion of any “previously non-compensable impairment”;
(d)     apply by way of a reduction, in dollar terms, the non-compensable proportion found in (c) to the lump sum payable in respect of the whole person impairment determined at (b).
The alternative approach, which I will call the “reduction in the percentage whole person impairment method”, applies the following methodology:
(a)     a determination is made of the whole person impairment;
(b)     a determination is made in percentage terms of any “previously non-compensable impairment”;
(c)     a deduction is made, in percentage terms, of the non-compensable proportion found in (b) from the whole person impairment percentage found in (a);
(d)     if the remaining whole person impairment is less than 15 per cent, no compensation is payable in accordance with s 65A(3) of the 1987 Act.

The dispute came before Arbitrator Edwards for a telephone conference on 9 March 2011. The following day, the Arbitrator entered orders, noting that the parties intended to make a joint Application for Leave to Refer a Question of Law to the President involving a novel or complex question of law. The Arbitrator directed that the Application be filed within 28 days of the telephone conference on 9 March 2011.
On 14 April 2011, the parties jointly lodged an application for leave to refer two questions of law (the application) under s 351(2) of the Workplace Injury Management and Workers Compensation Act 1998 (the 1998 Act).
On 19 April 2011, I directed that the WorkCover Authority of NSW be served with a copy of the application and set a timetable for the lodging of submissions. Section 106 of the 1998 Act confers on WorkCover a right to intervene in proceedings in the Commission. WorkCover has exercised that right and has lodged submissions on the questions of law referred by the parties.
It is not disputed that the worker suffers a psychiatric injury diagnosed as post-traumatic stress disorder.
The parties agree that the applicant suffers a permanent impairment within the meaning of the 1987 Act, assessed at 15 per cent or greater, subject to the application of the transitional provisions.
The referral involves two questions of law.

THE FIRST QUESTION OF LAW

“Does the found ‘proportion’ referred to in Sch 6 Pt 18C cl 3(2) Workers Compensation Act 1987 result in a reduction to the degree of permanent impairment or a reduction to the amount of compensation payable?”

THE SECOND QUESTION OF LAW

“Whether, in view of Pt 5 of the WorkCover Guidelines, the respondent is bound to accept the result that is most beneficial to the applicant in the event of differing medical opinions?”

LEAVE

Before granting leave to refer the question, I must be satisfied that the question meets the requirements of s 351(3) of the 1998 Act, which provides:
“(3)The President is not to grant leave for the referral of a question of law under this section unless satisfied that the question involves a novel or complex question of law.”

Leave in respect of the first question

The question has arisen for application and determination in a number of matters in this Commission and the residual jurisdiction of the District Court of New South Wales.
The transitional provisions have been applied adopting the “reduction in the percentage whole person impairment method” by:
(a)     Neilson DCJ in Maguire v SAS Trustee Corporation (No 2) 7 DDCR 404;
(b)     Armitage DCJ in Blakemore v SAS Trustee Corporation (unreported, NSWDC, Armitage DCJ, No RJ 00633/08, 11 December 2009);
(c)     Arbitrator Grotte in M v NSW Police Force [2010] NSWWCC 244.
The alternative approach to the application of the transitional provisions, that is, by adopting the “reduction by lump sum method”, has been applied by:
(a)     Arbitrator McManamey in Young v Commissioner of Police [2010] NSWWCC 279;
(b)     Arbitrator Tanner in Ryan v New South Wales Police Force [2010] NSWWCC 346;
(c)     Gibb DCJ (by way of obiter) in Coleman v SAS Trustee Corporation (unreported, NSWDC, Gibb J, No RJ 563/09, 19 November 2010);
(d)     Arbitrator Peacock in Pickavance v NSW Police Force [2011] NSWWCC 149.
I accept the parties’ submission that complexity arises from the uncertainty surrounding the manner in which the transitional provisions in Sch 6 Pt 18C cl 3 are to be applied.
The issue is of particular significance in this case as the applicant is seeking lump sum compensation for a degree of permanent impairment for post-traumatic stress disorder resulting from exposure to a series of traumatic events he experienced in the course of performing his duties as a police officer.
Some of the traumatic events relied upon by Mr Fleming as giving rise to his condition occurred before the amendments to Div 4 of Pt 3 of the 1987 Act, which introduced the entitlement to lump sum compensation for psychological injury. Thus, it is highly likely that the Arbitrator will be required to apply the transitional provisions when determining Mr Fleming’s entitlement to lump sum benefits.
Notwithstanding the parties’ agreement that Mr Fleming suffers a whole person impairment of greater than 15 per cent, if the reduction in the percentage whole person impairment method is adopted, his entitlement may be assessed at less than 15 per cent, in which case he would not be entitled to any lump sum compensation (s 65A(3)).
A determination of the issue in dispute requires an interpretation of the legislation with application not only to the parties in the current proceedings, but more broadly within the jurisdiction.
I note that the Arbitrator, the parties and WorkCover agree that the question posed is both novel and complex within the meaning of s 351 of the 1998 Act.
I am satisfied that the question, which requires an interpretation of the application of the transitional provisions found in Sch 6 Pt 18C cl 3(2) of the 1987 Act with respect to the quantification of any reduction in the compensation payable under Div 4 of Pt 3 for any proportion of the impairment concerned that is a previously non-compensable impairment, is both novel and complex.
Leave to refer the first question of law is granted.

Leave in respect of the second question

The applicant submits that the question concerns the conduct of a respondent insurer upon receipt of a claim pursuant to s 281. The question involved a consideration of whether a respondent is bound by the medical report upon which an offer pursuant to s 281 is made. It is submitted that the impact of that question concerns the extent to which, if at all, a respondent can subsequently allege a medical dispute exists where an offer pursuant to s 281 is made taking into account the transitional provisions where it is only the transitional provisions that are in dispute between the parties. It is submitted that the resolution of the question would provide clarity for respondent insurers as to their obligations pursuant to s 281.
The applicant submits that the second question relates to the approach to be taken by a respondent, upon receipt of a claim pursuant to s 281, in applying the transitional provisions, and it is thus related to the first question. Both the employer and WorkCover support the referral of the second question.
The question is based in the premise that ambiguity surrounds the correct method of application of Sch 6 Pt 18C cl 3(2) of the 1987 Act. The answer to the first question raised in this application will alleviate that ambiguity.
Whether a respondent will be bound by particular evidence in responding to a claim pursuant to s 281 will depend upon a variety of factual and other issues, and should be the subject of a determination by the Commission’s arbitrators as and when those issues arise. The question of law procedure envisaged by s 351 is not designed for the determination of such matters (Dimmock v State of New South Wales [2004] NSWWCCPD 64 at [16]).
For these reasons, I am not satisfied that the question involves a novel or complex question of law. Therefore, pursuant to s 351(3) of the 1998 Act, leave is refused.

ON THE PAPERS REVIEW

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 5, and the documents that are before me, including the written submissions by the parties and WorkCover, 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.

LEGISLATION

Section 65A of the 1987 Act provides:
“65A   Special provisions for psychological and psychiatric injury
(1)     No compensation is payable under this Division (either as permanent impairment compensation or pain and suffering compensation) in respect of permanent impairment that results from a secondary psychological injury.
Note. This does not prevent a secondary psychological injury from being compensated under section 67 as pain and suffering resulting from permanent impairment (but only if that permanent impairment results from a physical injury or a primary psychological injury).
(2)     In assessing the degree of permanent impairment that results from a physical injury or primary psychological injury, no regard is to be had to any impairment or symptoms resulting from a secondary psychological injury.
(3)     No compensation is payable under this Division (either as permanent impairment compensation or pain and suffering compensation) in respect of permanent impairment that results from a primary psychological injury unless the degree of permanent impairment resulting from the primary psychological injury is at least 15%.
Note. If more than one psychological injury arises out of the same incident, section 322 of the 1998 Act requires the injuries to be assessed together as one injury to determine the degree of permanent impairment.
(4)     If a worker receives a primary psychological injury and a physical injury, arising out of the same incident, the worker is only entitled to receive compensation under this Division in respect of impairment resulting from one of those injuries, and for that purpose the following provisions apply:
(a)the degree of permanent impairment that results from the primary psychological injury is to be assessed separately from the degree of permanent impairment that results from the physical injury (despite section 65 (2)),
(b)the worker is entitled to receive compensation under this Division for impairment resulting from whichever injury results in the greater amount of compensation being payable to the worker under this Division (and is not entitled to receive compensation under this Division for impairment resulting from the other injury),
(c)the question of which injury results in the greater amount of compensation is, in default of agreement, to be determined by the Commission.
Note. If there is more than one physical injury those injuries will still be assessed together as one injury under section 322 of the 1998 Act, but separately from any psychological injury. Similarly, if there is more than one psychological injury those psychological injures will be assessed together as one injury, but separately from any physical injury.
(5)     In this section:
primary psychological injury means a psychological injury that is not a secondary psychological injury.
psychological injury includes psychiatric injury.
secondary psychological injury means a psychological injury to the extent that it arises as a consequence of, or secondary to, a physical injury.”
This section was inserted in the 1987 Act by the Workers Compensation Legislation Amendment Act 2001, which became operative on 1 January 2002.
Transitional provisions with respect to the application of the amendments to lump sum compensation provisions were also inserted in the 1987 Act by the Workers Compensation Legislation Amendment Act 2001 and also became operative on 1 January 2002. The relevant transitional provision is found in Sch 6 Pt 18C cl 3:
“3   Lump sum compensation amendments
(1)     The lump sum compensation amendments do not apply in respect of an injury received before the commencement of the amendments (even if the injury is the subject of a claim made after the commencement of the amendments) except as follows:
(a)the amendments to section 66A apply in respect of an injury received before the commencement of the amendments (even if the injury is the subject of a claim made after the commencement of the amendments) and so apply:
(i)subject to such modifications to that section as may be prescribed by the regulations, and
(ii)as if an agreement registered before that commencement by the Authority were registered by the Commission,
(b)the repeal of section 72 applies in respect of an injury received before the commencement of the amendments, but only to the extent that the injury is the subject of a new claim.
(2)     There is to be a reduction in the compensation payable under Division 4 of Part 3 (as amended by the lump sum compensation amendments) for any proportion of the permanent impairment concerned that is a previously non-compensable impairment. This subclause does not limit the operation of section 323 of the 1998 Act or section 68B of the 1987 Act.
(3)     A ‘previously non-compensable impairment’ is loss or impairment that is due to something that occurred before the commencement of the amendments to Division 4 of Part 3 made by the lump sum compensation amendments, being loss or impairment that is of a kind for which no compensation was payable under that Division before that commencement.
(4)     [not reproduced].”

Section 323 of the 1998 Act provides:
“323Deduction for previous injury or pre-existing condition or abnormality
(1) In assessing the degree of permanent impairment resulting from an injury, there is to be a deduction for any proportion of the impairment that is due to any previous injury (whether or not it is an injury for which compensation has been paid or is payable under Division 4 of Part 3 of the 1987 Act) or that is due to any pre-existing condition or abnormality.”

THE AUTHORITIES

SAS Trustee Corporation v Pearce [2009] NSWCA 302 (Pearce)

Mr Pearce was a police officer who, over an extended period of time, was exposed to a number of confronting and traumatic experiences which led to his discharge on medical grounds.
Under the Police Regulation (Superannuation) Act 1906 (NSW), he sought from the SAS Trustee Corporation a “gratuity” equivalent to the lump sum payment that would have been available to him had he come under the terms of the Workers Compensation Act 1987. He was certified as incapacitated as a result of a number of conditions, which included post-traumatic stress disorder and depression. The “notional” date of injury was identified as 10 November 2005 for the psychological injuries.
The trustee corporation declined to grant the gratuity, on the basis that the psychological injuries were sustained before 1 January 2002. Mr Pearce commenced proceedings in the District Court seeking an order for the payment of lump sum compensation.
Hughes DCJ found that the post-traumatic stress disorder (PTSD) was not a disease of gradual onset, but rather the result of a series of frank events or shocks. His Honour then applied s 323 of the 1998 Act and determined that, because the extent of the impairment was difficult to determine, a deduction of 10 per cent should apply in accordance with s 323(2). His Honour did not in his reasons refer to the transitional provisions.

His Honour found that the relevant whole body impairment was 15.3 per cent, having discounted the worker’s assessed whole person impairment of 17 per cent, by 10 per cent, for injuries received before January 2002. The trustee corporation appealed to the Court of Appeal.
Allowing the appeal, Basten JA (Beazley JA agreeing) held at [111] that, once the Commissioner determined that the date of injury occurred in 2005, because the post-traumatic stress disorder constituted a disease within the terms of s 15 or 16 of the 1987 Act, it was an injury received after the commencement of the amendments on 1 January 2002, and hence the transitional provisions were engaged.
Their Honours found at [104]–[109] that Hughes DCJ erred in applying s 323. Only one injury had been found to have occurred and that was in 2005. Section 323 depends on there being separate injuries, whereas the transitional provisions are concerned with an event or thing that occurred before the commencement of the amendment. They stated at [109]:
“Thus, if it could be shown that a ‘proportion’ of the permanent impairment was due to such an event or thing, a reduction in the payment of compensation would be required.” (emphasis added)
The Court went on to find at [112]:
“The reduction required by the transitional provisions turns on a causal connection between the impairment and the events which occurred before the commencement of the amendments. There may be various circumstances in which an injury is received after a particular date but is ‘due to something’ that occurred before that date. Circumstances which engage sub-ss 15 or 16, providing for deemed dates of injury, could also engage the transitional provisions and require a reduction under cl 3(2). They require the assessment of a ‘proportion’ of the impairment which is ‘due to’ events occurring before 2002.”
The matter was remitted to the District Court for re-determination.

Maguire v SAS Trustee Corporation (No 2) 7 DDCR 405 (Maguire)

Mr Maguire was a former senior constable. He suffered post-traumatic stress disorder associated with depression, anxiety and various other conditions. He claimed lump sum compensation by way of a “gratuity” under s 12D of the Police Regulation (Superannuation) Act 1906 (NSW). The defendant determined to pay Mr Maguire lump sum compensation in respect of 15 per cent whole person impairment for psychological injury and additional compensation for pain and suffering. The defendant gave 5 March 2004 as the “notional date for stress”. Mr Maguire appealed the determination to the District Court.
For 16 years, the plaintiff’s duties as a police diver exposed him to a series of traumatic events. Fourteen years of that period were prior to 1 January 2002 and two years subsequently. A significant event occurred in November 2002 when Mr Maguire retrieved the remains of a severely mutilated body.
Neilson J held that, although the plaintiff suffered from flashbacks and nightmares prior to the event of November 2002, it was that event which was the major cause of his psychiatric condition. Applying Sch 6 Pt 18C cl 3 of the 1987 Act, his Honour assessed that the whole person impairment be reduced by 50 per cent, to reflect the non-compensable impairment due to something that occurred before the commencement of the transitional provisions. This resulted in a 7.5 per cent whole person impairment (rounded to eight per cent).
His Honour found, in applying s 65A(3) of the 1987 Act, that no compensation was payable for a psychiatric condition because the whole person impairment was less than 15 per cent. Accordingly, the plaintiff was not entitled to any compensation for whole person impairment due to his psychiatric condition or for pain and suffering arising from it.
Although his Honour Judge Neilson adopted the reduction in the percentage whole person impairment method, it is apparent from his Honour’s judgment that the alternative approach, that is, to reduce the compensation by the dollar sum equivalent to the proportion of the impairment concerned that is a previously non-compensable impairment, was not the subject of any argument or consideration.

Blakemore v SAS Trustee Corporation (unreported, NSWDC, Armitage DCJ, No RJ 00633/08, 11 December 2009) (Blakemore)

Mr Blakemore was yet another police officer suffering a psychological impairment as a result of exposure to a series of traumatic events during the course of his employment as a serving police officer.
The defendant accepted that the plaintiff had been hurt on duty and assessed his whole person impairment at nine per cent. The plaintiff appealed to the District Court.
In an unreported decision on 11 December 2009, Armitage DCJ accepted that the appellant suffered a 19 per cent whole person impairment. He considered in detail the contribution to that impairment of events which pre-dated and post-dated the introduction of the transitional provisions on 1 January 2002. Allowing the appeal, his Honour concluded that, although the majority of the appellant’s service had occurred prior to January 2002, it was events that occurred after that date which played a greater causal role in the plaintiff’s whole person impairment. His Honour reduced the whole person impairment of 19 per cent by four per cent to reflect his assessment of the deduction to be attributable to events occurring before 1 January 2002. Consequently, the plaintiff was found to have suffered 15 per cent whole person impairment and the appeal was therefore successful.
As in Maguire, his Honour was not required to consider or determine the competing approaches to the assessment of the reduction in the compensation concerned with a previously non-compensable impairment; the parties made no submission on the reduction in lump sum method.

M v NSW Police Force [2010] NSWWCC 244 (M)

M brought proceedings in this Commission seeking lump sum compensation pursuant to s 66 for whole person impairment in respect of a psychological injury deemed to have occurred on 25 June 2007. There was no issue that M was suffering from a disease pursuant to s 15 or 16 of the 1987 Act, or that he was entitled to lump sum compensation.
Dr Potter, for the respondent, assessed the worker as suffering from 24 per cent whole person impairment. However, Dr Potter attributed the whole of the impairment to events that occurred prior to 1 January 2002. The issue for determination by the Commission concerned the assessment of the proportion of the impairment due to events occurring before 1 January 2002.
The Arbitrator rejected the medical evidence concerning the proportion of the impairment that pre-dated 1 January 2002 for various reasons that are not currently relevant. She determined that 75 per cent of the whole person impairment of 24 per cent was due to events that occurred prior to 1 January 2002 and 25 per cent (six per cent whole person impairment) was due to events that occurred after 1 January 2002. The Arbitrator determined that M was not entitled to any lump sum compensation, as the amount assessed as attributable to the events post 1 January 2002 was less than the 15 per cent threshold required by s 65A(3) of the 1987 Act.
The issue raised for determination by the referral of this question of law was not raised for consideration or determined by the Arbitrator in M.

Young v Commissioner of Police [2010] NSWWCC 279 (Young)

Ms Young filed an Application to Resolve a Dispute concerning a claim for lump sum compensation in respect of permanent impairment resulting from a psychological injury. The worker was assessed by an Approved Medical Specialist (AMS) as suffering from a psychological impairment, which was assessed at 15 per cent whole person impairment. The date of injury was deemed to be 7 January 2008. It was established that the impairment was due, at least in part, to something that occurred before the commencement of the transitional provisions on 1 January 2002. The dispute centred on whether the transitional provisions applied to require a reduction in the impairment percentage for which compensation was payable, or whether the deduction was to be applied to the overall monetary amount payable in permanent impairment benefits. After carefully evaluating the lay and medical evidence, the Arbitrator concluded that the worker’s condition was attributable 30 per cent to the events prior to 1 January 2002 and 70 per cent to the events thereafter.
The Arbitrator noted that the transitional provisions in Sch 6 Pt 18C cl 3(2) provide that the reduction is to be in the compensation payable under Div 4 of Pt 3. That division is headed “Compensation for non-economic loss” and makes provision for compensation for permanent impairment and for pain and suffering. Pain and suffering is to be assessed by reference to the most extreme case, taking into account actual pain or distress and anxiety suffered or likely to be suffered by the injured worker, whether resulting from the permanent impairment concerned or from any necessary treatment. He said at [41]:
“There is no necessary correlation between the extent of the permanent impairment suffered by a worker and the amount of compensation payable for pain and suffering. The transitional provision directs its attention to the compensation payable and not to the impairment assessed as resulting from the injury.”
After contrasting the wording of the transitional provisions with the wording of s 323, he went on to say:
“43.In s 323 it is clear that it is the degree of permanent impairment to which the deduction is to apply. By contrast the transitional provision applies reduction to the compensation payable.
44.It is also clear that the reduction is to apply to compensation payable pursuant to both s 66 and s 67. If the reduction was to be applied by reducing the compensable impairment pursuant to s 66 it would not automatically follow that there would be any variation in the assessment pursuant to s 67. In my view a reduction could only apply to the entirety of the compensation payable under Div 4 of Pt 3 if the deduction is to be applied to the monetary amount and not the impairment.”
Accordingly, the whole person impairment of 15 per cent assessed by the AMS, which would entitle the worker to a lump sum of $22,000, was reduced by 30 per cent to $15,400 after applying the transitional provisions. The Arbitrator took the same approach to the assessment of compensation pursuant to s 67. He assessed the worker’s entitlement at $15,000 for pain and suffering, but reduced the amount by 30 per cent applying the transitional provisions, and awarded the worker $10,500.

Ryan v New South Wales Police Force [2010] NSWWCC 346 (Ryan)

Mr Ryan was a serving police officer between 1990 and 2007. He developed psychological symptoms during the course of his employment as a result of his exposure to a series of traumatic events. A dispute arose concerning the extent of the whole person impairment arising from his condition. An application was lodged in the Commission. In November 2009, Mr Ryan was assessed by an AMS, Dr Steele, as suffering from a whole person impairment of 17 per cent.
Arbitrator Tanner concluded that the worker was adversely affected by numerous troubling incidents throughout the course of his employment as a police officer. His decompensation in 2007 was constituted by the cumulative effect of those events on the worker. After considering the evidence in detail, the Arbitrator concluded that the proportion of one-third of the impairment was due to events that occurred before the commencement of the transitional provisions.
The Arbitrator noted that the purpose of determining that proportion of the impairment that was due to something that occurred before the transitional provisions became operative was to consider a reduction in the impairment assessed. He noted the distinction that the determination of the pre-2002 proportion is not for the purposes of a deduction of impairment. The word “deduction” does not appear in Pt 18C of Sch 6.
The Arbitrator went on to note at [46] that, if the legislature had intended that the effects of a previously non-compensable impairment be addressed by means of a deduction, it can be expected to have stated so explicitly, by adopting wording similar to that found in s 323 of the 1998 Act, which requires an AMS to effect a deduction for any proportion of the impairment that is due to any previous injury or due to any pre-existing condition or abnormality.
The Arbitrator concluded at [48] that, if the legislature had intended a deduction of impairment to be effected, it would have entrusted that task to an AMS by adding to the limited range of powers provided in Pt 7 of the 1987 Act.
The Arbitrator concluded at [56] that the transitional provisions require that the compensation as assessed by the AMS be reduced to exclude compensation in respect of impairment that is due to “something that occurred” before 2002. Having assessed the relevant proportion to be one-third, the Arbitrator reduced the amount payable in respect of a 17 per cent whole person impairment, namely $25,300, by $8,433 (one-third), awarding the worker $16,867. The Arbitrator also reduced by one-third the amount of $20,000 which had been agreed between the parties as an appropriate sum to compensate the worker for pain and suffering pursuant to s 67.

Coleman v SAS Trustee Corporation (unreported, NSWDC, Gibb J, No RJ 563/09, 19 November 2010) (Coleman)

Mr Coleman was a police officer who suffered a post-traumatic stress disorder as a result of exposure to a series of distressing events in the course of his employment. He applied for a “gratuity” and lump sum payment in respect of pain and suffering under s 12D of the Police Regulation (Superannuation) Act (1906) (NSW). Pursuant to s 12D, the amount of any such gratuity shall not exceed the amount that would have been payable under Divs 3, 4 and 5 of Pt 3 of the 1987 Act if the officer had been a worker for the purposes of the Act. The application was unsuccessful.
Mr Coleman appealed the decision to the District Court and the matter came before her Honour Judge Gibb. Judge Gibb ultimately determined that the degree of permanent impairment resulting from the psychological injury was less than 15 per cent. It was therefore less than the threshold required by s 65A(3) of the 1987 Act for the payment of lump sum compensation in respect of a psychological injury.
By way of obiter, her Honour considered the construction of the transitional provisions the subject of this application. Her Honour noted that the plain words of the provision apply the “discount” to the “compensation payable” rather than to the assessment of the degree of permanent impairment. She also noted that the wording is quite different to the wording adopted by s 323 of the 1987 Act with respect to the deduction for previous injury or pre-existing condition or abnormality. After considering the authorities, she concluded that, had the transitional provisions been engaged, the deduction is to be made by way of a “reduction in the compensation payable”. In other words, had she been required to do so, she would have reduced the 15 per cent impairment finding (which entitled the claimant to $20,000) by one-third, reducing the compensation payable from $20,000 to $13,200.

Pickavance v NSW Police Force [2011] NSWWCC 149 (Pickavance)

Mr Pickavance suffered a psychological injury in the form of post-traumatic stress disorder which arose during the course of his employment as a police officer. It was not disputed that Mr Pickavance’s condition arose out of his employment and to which his employment was a substantial contributing factor.
Arbitrator Peacock found that Mr Pickavance’s entitlements to lump sum compensation for his psychological injury were determined by reference to a deemed date of injury of 18 May 2003. That finding enlivened the transitional provisions.
As in the matters to which I have already referred, the parties were in dispute as to the application of the transitional provisions. There was no dispute that the condition from which Mr Pickavance suffered was the result of events that occurred both before and after 1 January 2002. However, the parties could not agree on how the transitional provisions should be construed or applied.
NSW Police contended that the reduction should be applied to the percentage whole person impairment (agreed at 22 per cent) and argued for a 25 per cent reduction in the percentage impairment. Mr Pickavance contended that, in accordance with a literal interpretation of the transitional provisions, there should be a reduction in the compensation or dollar amount payable to him, and contended that it should be a 50 per cent reduction in the compensation payable under s 66 and s 67.
Arbitrator Peacock ultimately adopted the approach suggested by Gibb J in Coleman. The Arbitrator stated at [97] that, in her view, when approaching the construction of the transitional provisions in the context of beneficial legislation, the provisions should be given their literal meaning. They provide for a reduction in the compensation payable:
“In other words, providing for a reduction in the compensation payable under the transitional provisions is not the same as providing for a deduction in the degree of permanent impairment as provided for in s 323 of the 1998 Act. If the legislature intended there to be a reduction in the degree of permanent impairment then they would have said so, as they did in s 323 of the 1998 Act.”
Based on the totality of the evidence before her, the Arbitrator found that a 50 per cent reduction in the compensation payable was the appropriate assessment of the proportion of the impairment that occurred prior to 1 January 2002.
It was not disputed that the worker suffered a 22 per cent whole person impairment which without reduction would have entitled him to a lump sum of $32,500. The Arbitrator reduced this sum by $16,250 (50 per cent reduction) and entered an award under s 66 in the sum of $16,250. The Arbitrator also reduced the agreed entitlement under s 67 of $20,000 by 50 per cent and entered an award under s 67 for $10,000.

DISCUSSION

Although the first question posed is relatively straightforward, the issue raises novel and complex questions as to the construction of the transitional provisions consequent upon the 2001 amendments to the Compensation Acts.
The question involves, in particular, the construction to be applied to the words “reduction in the compensation payable” in the context of apportioning compensation for previously non-compensable impairment, due to something that occurred before the commencement of the amendments to Div 4 of Pt 3 of the 1987 Act.
In approaching the task, I am mindful of the requirements of s 33 of the Interpretation Act 1987:

“33 Regard to be had to purposes or objects of Acts and statutory rules

In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object.”

In other words, s 33 requires a purposive approach to interpreting statutory provisions.

The principles of statutory construction were recently discussed in Wilson v State Rail Authority of New South Wales [2010] NSWCA 198 (Wilson). At [12], Allsop P (Giles and Hodgson JJA agreeing) stated the relevant principles, which were recently considered and summarised by Deputy President Roche in Collingridge v IAMA Agribusiness Pty Ltd [2011] NSWWCCPD 31:
“(a) ‘[i]t is the language of Parliament that must be interpreted and construed’;
(b)‘in construing an Act, a court is permitted to have regard to the words used by Parliament in their legal and historical context’;
(c)‘[c]ontext is to be considered in the first instance, not merely when some ambiguity is discerned’;
(d)‘[c]ontext is to be understood in its widest sense to include such things as the existing state of the law and the mischief or object to which the statute was directed’;
(e)‘[f]undamental to the task, of course, is the giving of close attention to the text and structure of the Act, as the words used by Parliament to effect its legislative purpose’, and
(f)‘general words, informed by an understanding of the context, and of the mischief to which the Act is directed, may be constrained in their effect’.”

When applying those principles, it is important to understand the context in which the transitional provisions are to be construed.

The word “compensation” is defined at s 4 of the 1998 Act to mean “compensation under the Workers Compensation Acts, and includes any monetary benefit under those Acts”. “Permanent impairment compensation” is defined in s 4 to mean “compensation for permanent impairment under section 66 of the 1987 Act” and “pain and suffering compensation” is defined to mean “compensation for pain and suffering under section 67 of the 1987 Act”. It is clear that, under these provisions, compensation means a monetary benefit.
The distinction between “permanent impairment” and “permanent impairment compensation” is illustrated in s 65(3) of the 1987 Act, which provides that, where there is a dispute concerning the degree of permanent impairment, the Commission may not award “permanent impairment compensation” or “pain and suffering compensation” unless the degree of “permanent impairment” has been assessed by an Approved Medical Specialist. The distinction is repeated in s 66 and s 67 of the 1987 Act.
The language of the transitional provision in Sch 6 Pt 18C cl 3(2) of the 1987 Act leads me to conclude that the reduction for any proportion of the permanent impairment found to be a previously non-compensable impairment is to be effected by a reduction “in the compensation payable”, not by a reduction in degree of whole person impairment. My reasons for reaching that conclusion are set out below.
Firstly, as discussed in Ryan and Pickavance, had the legislature intended that the effects of a previously non-compensable impairment were to be addressed by means of a reduction to the percentage whole person impairment, it can be expected to have stated so explicitly, by adopting similar wording to that which requires an Approved Medical Specialist to deduct any proportion of the impairment that is due to a previous injury or pre-existing condition or abnormality, as required by s 323 of the 1998 Act.
WorkCover, arguing in favour of the reduction in the percentage whole person impairment approach, submits:
“the Approved Medical Specialist has a binding power of assessment of the level of permanent impairment and the amount to be deducted because of pre-existing impairment, therefore it follows that the deduction is from the level of impairment as opposed to the monetary amount.”
WorkCover points to the similarities in the wording of cl 3(2) and s 323 of the 1998 Act. It submits that the only difference is that s 323 refers to all previous injuries, not merely previously non-compensable ones. However, that is not the only distinction. Section 323(1) is directed to the assessment of the degree of permanent impairment and the assessment of any proportion of the impairment due to previous injuries, pre-existing conditions or abnormalities, whereas cl 3(2) is directed to the reduction in the compensation payable in respect of a previously non-compensable impairment, being a loss or impairment due to something that occurred before the amendments to Div 4 of Pt 3 of the 1987 Act.
The submission also ignores the fact that cl 3(2) does not speak in terms of a deduction in the impairment found for any proportion of the impairment due to previous injury, pre-existing abnormality or condition (as s 323 does), but rather in terms of a reduction in the compensation payable in respect of the “proportion” of the impairment “due to” something that occurred before the amendments to Div 4 of Pt 3 of the 1987 Act.
Secondly, it might reasonably have been expected that, if the legislature had intended that a reduction of impairment be effected to reflect the extent of the non-compensable component of the impairment, it would have added that task to the range of powers exercisable by Approved Medical Specialists pursuant to Ch 7 Pt 7 of the 1998 Act.
It does not follow, as WorkCover submits, that because an Approved Medical Specialist has a “binding power of assessment of the degree of permanent impairment”, which I infer is a reference to medical assessment certificates being “conclusively presumed to be correct” as to the matters referred to in s 326(1)(a)–(e) of the 1998 Act, the reduction referred to in cl 3(2) is to be from the level of impairment, not from the monetary amount. A certification by an AMS in respect of the matters listed in s 326 does not equate to a determination of the dispute by the Commission (Jopa Pty Ltd t/as Tricia’s Clip-n-Snip v Edenden [2004] NSWWCCPD 50). Following such a certification, disputes are returned to an arbitrator for final determination.
WorkCover draws attention to the concluding sentence in cl 3(2):
“this sub-clause does not limit the operation of s 323 of the 1998 Act or s 68B of the 1987 Act”.
It submits that:
“legislative consistency would require an interpretation of Schedule 6 clause 18C(3)(2) which is the same as the approach taken when making deductions under section 323 of the 1998 Act and section 68B of the 1987 Act, and that deductions under those sections always refer to the proportion of impairment, rather than the monetary amount referable to the impairment assessment.”
The submission is unsupported by any authority or rule of statutory construction and, for the reasons I have already given, I reject it.
I agree with Arbitrator Tanner (at [55] in Ryan) that cl 3(2) proceeds on the premise that a basis exists for the payment of lump sum compensation, namely, that the worker has suffered a primary psychological injury after 1 January 2002 and an Approved Medical Specialist has assessed an impairment of 15 per cent or more as a result of that injury. Once a worker has satisfied those thresholds, it is then necessary to apply the transitional provisions to reduce the “compensation payable” for “any proportion of the permanent impairment that is a previously non-compensable impairment”. In order to effect such a reduction, there must be a finding of fact regarding the causal connection between the impairment and the events which occurred before the amendments (Pearce). An arbitrator, not an Approved Medical Specialist, must make that finding.
The respondent and WorkCover rely on the findings in Blakemore and Maguire to support the reduction in the percentage whole person impairment approach. However, neither his Honour Judge Armitage in Blakemore nor his Honour Judge Neilson in Maguire were asked to consider or determine alternative methods of application of the transitional provisions. In those matters, it was never argued that the application of the transitional provisions should be anything other than by means of a reduction in the percentage whole person impairment.
Thirdly, the Workers Compensation Legislation Amendment Act 2001, which amended the 1987 and 1998 Acts, was beneficial legislation in the sense that it introduced, for the first time, an entitlement to lump sum compensation for psychiatric injury.
In Articulate Restorations & Developments Pty Ltd v Crawford (1994) 10 NSWCCR 751 at 765, Mahoney JA noted that, in respect of beneficial legislation such as the workers compensation legislation, entitlements under such legislation should not depend on “distinctions which are too nice”. At the same time, the principle that beneficial legislation should be given a liberal construction does not entitle a court to give it a construction that is unreasonable or unnatural (per McColl JA in Amaca Pty Ltd v Cremer [2006] NSWCA 164, citing IW v City of Perth [1997] HCA 30; 191 CLR 1 (at 11–12) per Brennan CJ and McHugh J).
If there is any ambiguity in the language used, which I do not accept, then, in the context of beneficial legislation, the ambiguity should favour the worker and the Act should be construed beneficially (Bull v The Attorney General for New South Wales [1913] 17 CLR 370 at 384).
The reduction by lump sum method fits more readily with these concepts than the reduction in the percentage whole person impairment method. For example, if the latter applied to psychiatric injury cases such as Mr Fleming’s case, rather than achieve an adjustment to the compensation payable to exclude compensation for something that occurred before the introduction of the transitional provisions, it may have the effect of extinguishing the worker’s entitlement to all compensation if the adjustment were to reduce the impairment below the 15 per cent threshold required by s 65A of the 1987 Act.
To give a further example, the application of the reduction in whole person impairment method could unfairly fetter a worker’s entitlement to bring common law proceedings for claimants who had satisfied the impairment threshold of 15 per cent (s 151H of the 1987 Act), by reducing the whole person impairment below that which is necessary to maintain an action for work injury damages.
The transitional provisions address the issue of the “compensation payable” to ensure that lump sum compensation is only payable for so much of the impairment that has resulted from the events that occurred after the introduction of the expanded benefits on 1 January 2002. A purposive interpretation achieves that end. The employer’s interpretation means that, in many cases, the worker would receive no lump sum compensation for his or her psychological injury, even if the majority of that impairment resulted from events that happened after 1 January 2002.
The application of the reduction by lump sum method adopts a construction of the transitional provisions that is not strained and it is an interpretation consistent with the words used.

ANSWER TO THE FIRST QUESTION

The reduction for any proportion of the permanent impairment found to be a previously non-compensable impairment referred to in Sch 6 Pt 18C cl 3(2) of the 1987 Act is to be effected by a reduction “in the compensation payable”, not by a reduction in degree of whole person impairment.

THE SECOND QUESTION OF LAW

Leave in respect of the second question of law is refused.

COSTS

As the written submissions before me failed to address the question of costs, I caused the matter to be listed for a telephone conference between the parties on 21 June 2011. The parties agreed that, as between the applicant and the respondent, the appropriate order is that the costs of this application be costs in the cause. Consequently, I make the following orders;
(a) As between the parties, the costs of this application be costs in the cause.
(b) The WorkCover Authority of New South Wales is to pay its own costs.

Judge Keating

President
23 June 2011

I, MARGOT UNDERCLIFFE, CERTIFY THAT THIS IS A TRUE AND ACCURATE RECORD OF THE REASONS FOR DECISION OF JUDGE KEATING, PRESIDENT OF THE WORKERS COMPENSATION COMMISSION.

ASSOCIATE