Matheson v Baptistcare NSW & Act

[2025] NSWSC 213

Supreme Court

New South Wales

Medium Neutral Citation:

Matheson v Baptistcare NSW & ACT [2025] NSWSC 213

Hearing dates:

12 March 2025

Date of orders:

18 March 2025

Decision date:

18 March 2025

Jurisdiction:

Common Law

Before:

Basten AJ

Decision:

(1)   Set aside the determination of the Medical Appeal Panel, Workers Compensation Division, Personal Injury Commission, dated 17 May 2024.

(2)   Set aside the medical certificate issued by the Commission, based on the appeal panel determination, and dated 17 May 2024.

(3)   Order that the first defendant pay the plaintiff’s costs in this Court.

Catchwords:

ADMINISTRATIVE LAW – judicial review – medical appeal panel determination of permanent impairment – reductions for pre-existing injury and previous secondary psychological injury – whether appeal panel complied with requirements for exercise of its statutory function

STATUTORY INTERPRETATION – whether guidelines for evaluation of permanent impairment inconsistent with Act – guidelines having effect in accordance with Act – statutory provisions to be read harmoniously – whether permanent impairment guidelines invalid to extent of inconsistency with operative provision of Workplace Injury Management and Workers Compensation Act 1998 (NSW) (1998 Act) – reading that Act harmoniously with Workers Compensation Act 1987 (NSW)(1987 Act)

WORKERS COMPENSATION – psychological injury – determination of degree of whole person impairment – deduction for asymptomatic pre-existing psychological condition – disregard of secondary psychological injury – whether possible to apply s 65A without assessing permanent impairment with respect to injury subject to claim – interaction between 1987 Act, s 65A and s 323 of 1998 Act

Legislation Cited:

Workers Compensation Act 1987 (NSW), ss 2A, 3, 65A, 66

Workplace Injury Management and Workers Compensation Act 1998 (NSW), ss 4, 293, 319, 322, 323, 376

State Insurance Regulatory Authority, “NSW workers compensation guidelines for the evaluation of permanent impairment”, (4th ed, reissued 1 March 2021), cl 1.22, Ch 11

Cases Cited:

Quintiliani-Johns v Secretary, Department of Education [2024] NSWSC 1200

Marks v Secretary, Department of Communities and Justice (No 2) [2021] NSWSC 616

Mercy Centre Lavington Ltd v Kiely [2017] NSWSC 1234

Vitaz v Westform (NSW) Pty Ltd [2011] NSWCA 254

Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 480; [2013] HCA 43

Coca-Cola Europacific Partners API Pty Ltd v Pombinho [2024] NSWCA 191

Category:

Principal judgment

Parties:

Michele Jean Matheson (Plaintiff)
Baptistcare NSW & ACT (First Defendant)
President, Personal Injury Commission of NSW (Second Defendant)
Medical Appeal Panel constituted under Workplace Injury Management and Workers Compensation Act 1998 (NSW), s 328 (Third Defendant)

Representation:

Counsel:
E Grotte (Plaintiff)
D Stiles (First Defendant)

Solicitors:
Somerville Laundry Lomax (Plaintiff)
Gair Legal (First Defendant)
Crown Solicitor (Second and Third Defendants)

File Number(s):

2024/00298864

Publication restriction:

Nil

 Decision under review 

Court or tribunal:

Personal Injury Commission

Jurisdiction:

Workers Compensation Division

Date of Decision:

17 May 2024

Before:

Medical Appeal Panel

File Number(s):

M1-W2360/23

JUDGMENT

1. BASTEN AJ: In 2013 Michele Jean Matheson (the claimant), suffered a psychiatric injury during her employment with Baptistcare NSW & ACT (the employer). She lodged with the Personal Injury Commission a claim for compensation for non-economic loss, under Pt 3, Div 4 of the Workers Compensation Act 1987 (NSW). Section 66 provides an entitlement to compensation where the injury results in permanent impairment. However, s 65A(3) states that no compensation is payable under the Division for a “primary psychological injury” unless the degree of permanent impairment is at least 15%.

2. An appeal panel of the Personal Injury Commission, Workers Compensation Division, assessed the claimant’s whole person impairment at 13%. That finding involved an assessment of the claimant’s current degree of permanent impairment as 17%, before deducting an amount of 1.5% for a pre-existing condition, and 2.5% for a “secondary psychological injury”, that is one consequential on a physical injury.

3. On 14 August 2024, the claimant filed a summons in this Court seeking judicial review of the determination and certificate of the appeal panel. There was no challenge to the finding that her current degree of permanent impairment was 17%. The challenge was directed to the two deductions.

4. Paragraph 16 of the summons identified five grounds, of which the first four, (a)-(d), related to the determination of a one-tenth deduction under s 323(2) of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (“Workplace Injury Act”). The plaintiff asserted that the appeal panel, not having found any pre-existing impairment, should not have concluded that the current degree of impairment was in any part “due to any pre-existing condition or abnormality”.

5. The second challenge related to the calculation of impairment due to a secondary psychological injury, the existence of which was not challenged. The appeal panel upheld a finding of the psychiatric member, Dr Baker, who conducted an examination of the claimant, that the secondary psychological injury contributed “less than one-sixth of 15.5% WPI [whole person impairment]”. That finding was challenged on the basis that there was no explanation in the reasons as to how the figure had been determined: ground (e). As initially presented in the claimant’s written submissions, the challenge depended on the degree to which it is necessary to explain how an evaluative judgment is arrived at, in circumstances where the factual basis for it has been identified with sufficient clarity. As will be explained below, the issue was in fact more complex and turned on the manner in which the effect of a secondary psychological injury was to be determined.

6. It is convenient to address the two challenges in that order.

Deduction for pre-existing condition

Statutory scheme

7. In order to explain the nature of the issue it is necessary to identify the key legislative provisions. First, as noted above, the claim for compensation turned on an assessment of the degree of permanent impairment suffered by the claimant. An assessment of that factor is undertaken in accordance with s 322 of the Workplace Injury Act, which states:

322   Assessment of impairment

(1)   The assessment of the degree of permanent impairment of an injured worker for the purposes of the Workers Compensation Acts is to be made in accordance with Workers Compensation Guidelines (as in force at the time the assessment is made) issued for that purpose.

(2)   Impairments that result from the same injury are to be assessed together to assess the degree of permanent impairment of the injured worker.

(3)   Impairments that result from more than one injury arising out of the same incident are to be assessed together to assess the degree of permanent impairment of the injured worker.

Note—

Section 65A of the 1987 Act provides for impairment arising from psychological/psychiatric injuries to be assessed separately from impairment arising from physical injury.

(4)   A medical assessor may decline to make an assessment of the degree of permanent impairment of an injured worker until the medical assessor is satisfied that the impairment is permanent and that the degree of permanent impairment is fully ascertainable. Proceedings before a court or the Commission may be adjourned until the assessment is made.

8. A dispute as to the “degree of permanent impairment of the worker as a result of an injury” is a “medical dispute” within the terms of s 319. In the first instance, the dispute is referred for assessment by a medical assessor, pursuant to s 293.

9. Two points should be noted arising from these provisions. First, as described in the Note to s 322(3), impairment arising from psychological injuries is assessed separately from impairment arising from physical injury. Secondly, the degree of permanent impairment is assessed in accordance with the Workers Compensation Guidelines referred to in s 322(1), a term defined in s 4 to mean guidelines issued under s 376. Section 376(1)(a) empowers the State Insurance Regulatory Authority to issue guidelines with respect to “the assessment of the degree of permanent impairment of an injured worker as a result of an injury”.

10. For the purposes of the first challenge, the critical statutory provision is s 323, as follows:

323   Deduction 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.

(2)   If the extent of a deduction under this section (or a part of it) will be difficult or costly to determine (because, for example, of the absence of medical evidence), it is to be assumed (for the purpose of avoiding disputation) that the deduction (or the relevant part of it) is 10% of the impairment, unless this assumption is at odds with the available evidence.

Note—

So if the degree of permanent impairment is assessed as 30% and subsection (2) operates to require a 10% reduction in that impairment to be assumed, the degree of permanent impairment is reduced from 30% to 27% (a reduction of 10%).

(3)   The reference in subsection (2) to medical evidence is a reference to medical evidence accepted or preferred by the medical assessor in connection with the medical assessment of the matter.

(4)   The Workers Compensation Guidelines may make provision for or with respect to the determination of the deduction required by this section.

(5)   (Repealed)

Note—

Section 68B of the 1987 Act makes provision for how this section applies for the purpose of calculating workers compensation lump sum benefits for permanent impairment and associated pain and suffering in cases to which section 15, 16, 17 or 22 of the 1987 Act applies.

11. The ordinary meaning of terms such as “permanent impairment” and “degree of permanent impairment” is not immediately evident. Nor are the terms defined in the statute. In fact, they gain meaning, with a high level of precision, from the means by which they are assessed, which requires reference to the Workers Compensation Guidelines and, relevantly, the “NSW workers compensation guidelines for the evaluation of permanent impairment” (“the Guidelines”), ^[1] as applicable in the present case.

    1. State Insurance Regulatory Authority (SIRA) (4th ed, reissued 1 March 2021).

12. The Guidelines are expressed as directions to a medical assessor. Chapter 11 “lays out the method for assessing psychiatric impairment”: cl 11.1. Under the heading “Diagnosis” the following appears:

11.4   The impairment rating must be based upon a psychiatric diagnosis (according to a recognised diagnostic system) and the report must specify the diagnostic criteria upon which the diagnosis is based.

13. The question of permanency is addressed in the following terms:

11.7   A psychiatric disorder is permanent if, in your clinical opinion, it is likely to continue indefinitely. Regard should be given to:

•   duration of impairment

•   the likelihood of improvement in the injured worker’s condition

•   whether the injured worker has undertaken reasonable rehabilitative treatment

•   any other relevant matters.

14. Of central importance to the present proceeding was the following requirement:

Pre-existing impairment

11.10   To measure the impairment caused by a work-related injury or incident, the psychiatrist must measure the proportion of WPI due to a pre-existing condition. Pre-existing impairment is calculated using the same method for calculating current impairment level. The assessing psychiatrist uses all available information to rate the injured worker’s pre-injury level of functioning in each of the areas of function. The percentage impairment is calculated using the aggregate score and median class score using the conversion table below. The injured worker’s current level of WPI% is then assessed, and the pre-existing WPI% is subtracted from their current level, to obtain the percentage of permanent impairment directly attributable to the work-related injury. If the percentage of pre-existing impairment cannot be assessed, the deduction is 1/10th of the assessed WPI.

15. The next clause deals with the “Psychiatric impairment rating scale (PIRS)” and commences:

11.11   Behavioural consequences of psychiatric disorder are assessed on six scales, each of which evaluates an area of functional impairment:

1   Self care and personal hygiene (Table 11.1)

2   Social and recreational activities (Table 11.2)

3   Travel (Table 11.3)

4   Social functioning (relationships) (Table 11.4)

5   Concentration, persistence and pace (Table 11.5)

6   Employability (Table 11.6).

[Items 1-3 are identified as “Activities of daily living”.]

11.12   Impairment in each area is rated using class descriptors. Classes range from 1 to 5, in accordance with severity. The standard form must be used when scoring the PIRS. The examples of activities are examples only. The assessing psychiatrist should take account of the person’s cultural background. Consider activities that are usual for the person’s age, sex and cultural norms.”

16. It is not necessary to set out the tables for present purposes, but they have been discussed in a number of cases, including recently, by Mitchelmore J in Quintiliani-Johns v Secretary, Department of Education. ^[2]

    2. [2024] NSWSC 1200 at [13]-[14].

17. The Guidelines then state that “[r]ating psychiatric impairment using the PIRS is a two-step procedure”, requiring the determination of a “median class score” and an “aggregate score”. Each median class score is translated into a “range of impairment”, identified as follows:

•   Class 1 = 0-3%

•   Class 2 = 4-10%

•   Class 3 = 11-30%

•   Class 4 = 31-60%

•   Class 5 = 61-100%.

18. The aggregate score is then used to determine the exact percentage of impairment within a particular median class range by means of a conversion table. The table is accompanied by explanatory notes.

19. Accordingly, the degree of permanent impairment in a particular case requires identification of a single numeric value in the form of a percentage. The Guidelines further state that “[p]ercentage impairment refers to whole person impairment (WPI)”: par 11.6. (The term “whole person impairment” is not used in the Acts.)

Assessment of asymptomatic injuries

20. The claimant submitted that the assessment by the appeal panel in relation to a pre-existing condition was required to be undertaken in accordance with the PIRS, and that, assessed on that basis, no permanent impairment was identified. The claimant submitted that, that being the only basis for assessment, there should have been no deduction for a pre-existing condition.

21. To the extent that the appeal panel’s reasons sought to identify some element of the claimant’s current psychological impairment as due to pre-existing conditions, that matter will be addressed below. For present purposes it is convenient to turn to the legal question raised by the claimant.

Statutory scheme

22. There are authorities in this Court and in the Court of Appeal holding that s 323(1) of the Workplace Injury Act requires a causal connection between a pre-existing injury, condition or abnormality and the impairment arising from the injury the subject of the claim. That is, there is to be a deduction where any proportion of the impairment “is due to” any previous injury, condition or abnormality. The deduction is not contingent upon a finding that the previous injury itself caused an impairment. Accordingly, an asymptomatic injury which contributes to the present impairment must result in a deduction.

23. However, all but one of the cases was concerned with physical injury: only one, to be addressed below, involved a psychological injury. Although s 323 does not distinguish between physical and psychological injuries, other parts of the Workers Compensation Acts do make such a distinction. For example, s 65A of the Workers Compensation Act, introduced in 2001, varied the threshold for lump sum compensation payments from 10% (which thereafter has only applied to physical injuries) to 15% for a primary psychological injury: s 65A(3). Secondly, s 65A introduced an obligation to disregard, in relation to psychological injuries, a “secondary psychological injury”. There is thus no a priori reason for assuming that a general provision such as s 323 of the Workplace Injury Act necessarily applies in the same way to each category of injuries.

24. Importantly, cl 11.10 in the Guidelines, dealing specifically with the calculation of a “pre-existing impairment”, in relation to a psychological injury, requires the calculation of a percentage impairment in applying s 323.

25. It is, of course, true that the Guidelines cannot, of their own force, vary the substantive effect of the Acts. However, the Guidelines do not operate of their own force in that manner: their operation is given mandatory statutory effect, in general terms by s 322(1) and, specifically in relation to the calculation of a pre-existing condition, by s 323(4). There is no reason in principle why those two provisions cannot give effect to a guideline which, in a particular respect, qualifies the substantive effect of s 323(1).

26. Further, as has been explained by reference to the detailed and, in one sense, artificial, structure imposed by the Guidelines on the assessment of “permanent impairment” with respect to psychological injuries, the degree of permanent impairment has no content separate from the numerical value mandated by application of the Guidelines.

27. Further, as a practical matter, the concept of an asymptomatic psychological condition differs from that of an asymptomatic physical injury. For example, a degenerative condition of the spine may be asymptomatic until the occurrence of a frank injury, but will have contributed to the impairment resulting from that injury. In such a case, the existence of the asymptomatic condition is capable of being identified and diagnosed. The existence of an asymptomatic psychological condition is usually not open to such proof of existence. Thus, the PIRS used to assess permanent impairment from psychological injuries is entirely based on behavioural factors, as compared with the guidelines dealing with physical injury which require assessment of physical conditions, such as reflexes, hearing loss and the results of radiological investigation.

28. Thus, where the impairment caused by a psychological injury is to be assessed by reference to behavioural elements, it makes sense that any reduction in the numerical result of that assessment should be made by reference to behavioural elements.

29. In one sense, this approach is consistent with the proposition that the existence of a pre-existing condition must be proven and not assumed. For example, not everyone exposed to a sudden shock which would qualify as criterion A for post-traumatic stress disorder under the DSM-5-TR will experience post-traumatic stress disorder. On the other hand, a person not exposed to such a shock cannot, by definition, suffer from PTSD.

Authority to the contrary

30. In Marks v Secretary, Department of Communities and Justice (No 2),^[3] Simpson AJ held that to the extent that cl 11.10 of the Guidelines precluded the assessment of impairment from a previous injury which was asymptomatic, it was inconsistent with the causative element of s 323 and was therefore invalid: at [29].

    3. [2021] NSWSC 616.

31. The reasoning to this conclusion involved five steps.

1. First, and uncontroversially, s 323(1) requires a causal connection between a pre-existing injury and a current state of impairment.

2. Secondly, an asymptomatic condition could contribute to the degree of impairment, as explained in the following passage:

“[16]   The more important question, which the plaintiff’s submissions did not address, is whether a pre-existing condition, notwithstanding that it is asymptomatic at the time of the injury in respect of which the assessment is undertaken, may, nevertheless, contribute to the degree of impairment. In respect of physical injuries, it has long been held that it can: Government Cleaning Service v Ellul (1996) 13 NSWCCR 344; Matthew Hall Pty Ltd v Smart [2000] NSWCA 284; (2000) 21 NSWCCR 34; Elcheikh v Diamond Formwork (NSW) Pty Ltd (In Liquidation) [2013] NSWSC 365 at [91] and [95].”

3. Thirdly, because s 323(1) does not distinguish between physical and psychological injury, the authorities dealing with physical injuries must apply equally to psychological injury: at [17].

4. Fourthly, insofar as the Guidelines make such a distinction, they are inconsistent with s 323(1) of the Workplace Injury Act: at [19]-[20].

5. Fifthly, because the Guidelines cannot prevail over the Act, cl 11.10 of the Guidelines is to that extent invalid: at [29].

32. This reasoning fails to address the distinctions drawn within the Workers Compensation Acts as to the treatment of psychological and other injuries, and thus omits inferences to be drawn from the legislative scheme. Further, the reasoning fails to give proper effect to the statutory provisions relating to the Guidelines. A finding of invalidity of one part of a coherent and rational statutory scheme should not readily be made.

33. It appears that the statutory analysis set out above did not feature in the submissions in Marks (No 2). Thus the plaintiff’s submission in that case was characterised as being “that s 322(1) ‘gives precedence’ to the Guidelines”: at [28]. The judge observed that there was nothing “in either s 376 or s 323(4) that authorises the issue of guidelines that are inconsistent with any provision of the [Workplace Injury Act]”. That is so: however, what is required is a construction of the legislation which deals harmoniously with the different provisions. Although in Marks (No 2) it was recognised that s 322(1) “mandates that the assessment of the degree of permanent impairment ‘is to be made’ in accordance with those guidelines” (at [6]), there was no consideration of how permanent impairment could be assessed otherwise than by reference to the Guidelines. In a real sense, the statutory scheme is one by which the Guidelines defined what was and what was not a permanent impairment, by placing a firm structure, with specified criteria, for the assessment of the degree of permanent impairment.

34. As to the specific authorisation in s 323(4) that the Guidelines “may make provision for or with respect to the determination of the deduction required by this section”, Simpson AJ held that the phrase “required by this section” referred back to s 323(1), and thus could not limit the causal connection. With respect, that reading turns the phrase identifying the power with respect to which the Guidelines are to operate, into a constraint on the scope of the Guidelines. No doubt it is true that sub-s (1) is the operative provision, identifying the purpose of the section; however, it is not to be read in isolation from the rest of the section, or from the previous section. A precondition to the operation of s 323(1) is that a causal connection can be established between a previous injury and the existing state of impairment. There is no inconsistency between the terms of sub-s (1) and a guideline which states how that pre-condition may be satisfied. Accordingly, a guideline which states that an asymptomatic psychological condition cannot satisfy the precondition, is not inconsistent with the operation of s 323(1).

35. In my view, cl 11.10 of the Guideline is not invalid. It follows that the medical assessor and appeal panel were bound to apply it in the present case. The next question is whether the appeal panel did apply that guideline: it certainly purported to do so, up to a point.

Application of Guidelines

36. The claimant submitted that there was no finding by the appeal panel of any pre-existing condition (other than that giving rise to the secondary psychological condition) as at the date of the commencement of the primary psychological condition in 2013. Although the appeal panel referred in its reasons (by adopting the report of Dr Baker) to the prior history of the claimant, the only reference to a pre-existing condition related to a finding of post-traumatic stress disorder caused by the first motor accident in 1990. However, as the assessment pointed out, that condition did not affect her ability to “drive, to study and continuing her career for many years ahead”. The only identified consequence of the condition, resulting from the accident, the claimant submitted, was a contribution to the claimant’s separation from her husband in 2000, described as “more than a negligible contribution to the separation of the marriage”. The history indicated that the couple had continued to raise three children cooperatively, including times when the husband slept at the family home. There was no finding that the separation contributed to her current depressive illness and therefore the impairment following from it. Counsel for the claimant further observed that while the appeal panel provided no assessment in accordance with the PIRS categories, based on the description given, the only available finding was that of 0% pre-existing whole person impairment.

37. The respondent contended that the descriptive material justified the ultimate conclusion that there was a pre-existing psychological condition. That the category of “social functioning” had been carefully addressed in respect of the pre-existing condition and the primary psychological condition.

38. Dr Baker discussed “pre-existing functioning” under the heading “Pre-existing condition of post-traumatic stress disorder caused by first motor accident.” Earlier in the report (at p 7) Dr Baker had set out the circumstances of the accident in about 1990 when the claimant was a passenger in a motor vehicle driven by her husband. Although she was taken to Lismore Base Hospital after the accident, the account continued:

“She said that she did not receive any psychological or physical treatment. She said that she thought her children would die as the children screamed. She stated she did have symptoms of post-traumatic stress disorder however she did not receive treatment. She continued caring for her children. She considered the motor accident was a contributing factor in the need for separation from her husband.”

39. Dr Baker did not diagnose post-traumatic stress disorder, nor did he identify when such a diagnosis was made: a patient self-reporting symptoms in terms of PTSD self-evidently does not constitute a diagnosis. The claimant submitted that the earliest diagnosis appeared in a report, in point form, of Dr Julius Petroff, consultant psychiatrist, dated 17 May 2017 – that is, four years after the primary psychological condition commenced. There was no reference in his notes to the cause of the PTSD, nor to the 1990 motor accident. Further, as the plaintiff pointed out, there was no finding that the psychological sequelae of the motor accident had significant effect beyond the claimant’s separation from her husband. When assessing the scales with respect to the primary psychological condition, Dr Baker commenced the description under the same heading, “Social functioning”, with the following statement:

“The applicant’s relationship with her husband was unaffected by the primary psychological injury.”

40. Having completed his calculations of whole person impairment, Dr Baker backtracked to give an “explanation of my calculations and reasons for assessment”: page 15-16. After dismissing the deaths of the claimant’s father and mother (as having a “less than negligible” effect on the primary psychological injury), he continued:

“The contribution to whole person impairment caused by the motor accidents prior to the onset of this primary psychological injury was small. Neither motor accident prevented the applicant from continuing to drive, to study and continuing her career for many years ahead.

The separation after the first motor accident had more than a negligible contribution to the separation in the marriage.

The contribution of the pre-existing condition posttraumatic stress disorder caused by the first motor accident is difficult to fully assess. The contribution of this condition to the claimant’s primary psychological injury would be less than one tenth of the assessed whole person impairment.”

41. If Dr Baker in fact addressed the six scales identified in cl 11.11 and, arguably, by reference to the accompanying tables, but without expressly identifying any class in any table, this omission precluded a finding of any level of pre-existing impairment in accordance with the Guidelines.

42. Further, there was no assessment undertaken of the behavioural effects of the first motor accident some 23 years later, when the primary psychological condition arose. In the absence of such a finding, properly assessed by reference to the Guidelines, the existence of the pre-existing condition at the relevant time was not established. In that circumstance, to make a deduction pursuant to s 323(1) in respect of a pre-existing condition, the existence of which is merely assumed, is an error of law.

43. The claimant’s submission that there should have been no deduction for any pre-existing psychological condition (other than the secondary psychological condition consequent upon the 2012 workplace injury) should be accepted.

44. This conclusion requires no reassessment of the findings made by the appeal panel nor does it rest on a conclusion that the panel failed to provide proper reasons for the conclusion it did reach. Rather, the findings in fact made are accepted, but the critical finding necessary to support the deduction, was not made, either expressly or by implication. As there was no legal basis for the deduction, the decision of the appeal panel involved a material error of law, appearing from its reasons (which were treated as part of the “record” ^[4] ), and constituted a constructive failure to exercise its proper legal function. The decision and the certificate must be set aside on that basis.

    4. See Supreme Court Act 1970 (NSW), s 69(4).

Deduction for secondary psychological injury

45. There was no dispute that the claimant suffered from a secondary psychological injury, namely psychological symptoms arising from physical injuries to her back and shoulder with persistent experiences of pain and fear of exacerbating her pain. The claimant conceded that the medical assessor had erred in failing to make allowance for that condition.

Statutory scheme

46. The appeal panel undertook a calculation which commenced by accepting the unchallenged assessment by the medical assessor as to current whole person impairment (17%), reducing it by 1.5% (which was 8.8% of the 17%) pursuant to s 323(1); and then reducing it again by one-sixth of the result (identified as 15%, rather than 15.5%) purportedly giving effect to s 65A. Given a rounding down in the first calculation and a rounding up on the second, the appeal panel correctly observed that the result was 13% whichever the order in which the deductions were made. However, the calculation raises two questions which were not addressed by the panel.

47. One question was whether it was correct to treat the assessment of the secondary psychological injury as a fraction (or percentage) of the total. The result of that calculation will differ depending upon the current level of impairment. It is arguable that there is only one correct outcome for each calculation. The problem was exacerbated in the present case by a failure to assess either figure in accordance with the Guidelines.

48. A second (temporal) question arose from the fact that the secondary psychological injury was sustained in 2012; the primary psychological injury was sustained in 2013. On one view, the secondary psychological injury was not only within the statutory disregard required by s 65A(2), but was also a pre-existing injury for the purposes of s 323. It is semantically possible that s 323 can apply to a secondary psychological injury, as is apparent from the words in parentheses in s 323(1), namely “whether or not it is an injury for which compensation … is payable under Div 4 of Pt 3 of the 1987 Act”. The formal calculation sheet completed by the appeal panel included a s 323 reduction of 4%, thus treating both as deductions under s 323.

49. The legal basis for the “deduction” made by the appeal panel must be found in s 65A of the Workers Compensation Act:

65A   Special provisions for psychological and psychiatric injury

(1)   No compensation is payable under this Division in respect of permanent impairment that results from a secondary 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.

…

(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.

50. As can be seen from s 65A(2), impairment resulting from a secondary psychological injury is not so much a basis for a deduction as a matter to be disregarded in assessing the permanent impairment resulting from the primary psychological injury. One consequence of this approach is that both must be assessed on the correct basis, namely by application of the Guidelines.

51. In Mercy Centre Lavington Ltd v Kiely, ^[5] the secondary psychological condition arose at the same time as the primary psychological condition and could not be treated as a pre-existing condition for the purposes of s 323 of the Workplace Injury Act. (Why both psychological conditions did not result from the physical injury was obscure.) Wilson J stated:

“60 Sections 65A and 323 serve different purposes: s 65A deals with compensation; s 323 deals with assessment of impairment. The two provisions are not intended to work together.”

5. [2017] NSWSC 1234.

52. If the intended meaning of that observation was that each provision had its own operation, that may be accepted. However, while each of s 65A and s 323 must be applied having regard to their separate functions, it cannot be correct to read the Workers Compensation Act and the Workplace Injury Act as if they were dealing with different matters. First, s 2A of the Workers Compensation Act relevantly provides:

2A Relationship to Workplace Injury Management and Workers Compensation Act 1998

(1)   The Workplace Injury Management and Workers Compensation Act 1998 is referred to in this Act as the 1998 Act.

(2)   This Act is to be construed with, and as if it formed part of, the 1998 Act. Accordingly, a reference in this Act to this Act includes a reference to the 1998 Act.

(3)    In the event of an inconsistency between this Act and the 1998 Act, the 1998 Act prevails to the extent of the inconsistency.

53. Secondly, s 65A of the Workers Compensation Act includes two Notes, each of which refers to the assessment required by s 322 of the Workplace Injury Act. Thirdly, and consistently, s 322 itself expressly refers to s 65A of the Workers Compensation Act in a Note to sub-s (3). The two Acts must be read coherently and harmoniously. They contain their own paramountcy provision in s 2A(3) of the Workers Compensation Act. That is, in the case of inconsistency the Workplace Injury Act prevails. As has already been noted, s 65A qualifies in two respects the exercise required by s 322 of the Workplace Injury Act: that does not demonstrate inconsistency but is part of the overall legislative scheme.

54. Mercy Centre was correct to treat the two provisions as requiring separate calculation and denying that s 65A gave rise to a deduction under s 323. That construction is consistent with the Guidelines which state:

1.22    A primary psychiatric condition is distinguished from a secondary psychiatric or psychological condition, which arises as a consequence of, or secondary to, another work related condition (eg depression associated with a back injury). No permanent impairment assessment is to be made of secondary psychiatric and psychological impairments. As referenced in [the] section [headed] Multiple impairments, impairments arising from primary psychological and psychiatric injuries are to be assessed separately from the degree of impairment that results from physical injuries arising out of the same incident. The results of the two assessments cannot be combined.

55. In stating that “no regard is to be had to any impairment or symptoms resulting from a secondary psychological injury”, s 65A(2) is badly worded: it does not require the medical assessor to have no regard to such impairment or symptoms; on the contrary, they are to be identified so as to exclude them from the assessment process. That exercise must be undertaken in conjunction with the assessment of the degree of permanent impairment attributable to the primary psychological injury the subject of the claim. Thus, a secondary psychological injury is to be identified and then disregaded in calculating the degree of permanent impairment arising from the injury the subject of the claim.

Reasoning of appeal panel

56. The primary consideration in relation to the secondary injury, namely fear of pain, would readily have fallen within PIRS Table 11.6, dealing with “employability”. That exercise was not undertaken by the appeal panel because the classes provided in relation to the various scales for the primary injury were not identified. Not only did the appeal panel not attach a form setting out the PIRS assessments, but it did not, descriptively, explain its reasoning by reference to the tables in the Guidelines. The relevant description as to employability in relation to her current condition, was the following statement by Dr Baker:

“The applicant was on jobseeker allowance. She was required to apply for one job per month. … She had no offers of employment since the employer made her redundant in 2013. The applicant had depressive themes of hopelessness, worthlessness and loss of motivation to comply with Australian Government Centrelink requirements. …

Whilst the applicant has assisted with the care of her grandchildren at times of need, she would not be reliable enough to be entrusted by an employer to perform the demanding role of pre-school childcare.”

57. In relation to the pre-existing condition of post-traumatic stress disorder, under the heading “employability”, Dr Baker stated:

“The applicant was not impaired in her employability. The applicant was able to find employment and continue her role for many years after having experienced two motor accidents.”

58. In relation to her secondary psychological injury, Dr Baker recorded:

“The secondary psychological injury is definable by the persistent experience of pain as well as the psychological symptoms of fear of exacerbation of pain. The applicant reported that ‘all of her job applications fail’ as she is not allowed to lift more than 7-10kg in weight. She said she becomes anxious, agitated and distressed every time she applies as ‘no one ever responds’ to her application[s]. She said, ‘it’s like I don’t exist’, ‘I’m worthless’.

…

She remained excessively preoccupied with her pain experience that had failed to recover despite extensive and prolonged multimodal treatment.

…

The psychological contribution of the applicant’s secondary psychological injury is less than 1/6 of 15.5% WPI. The reason for this is that the contribution to whole person impairment is markedly attributable to the loss of employability. Should the applicant gain employment then most of her psychological symptoms of high anxiety, agitation and distress regardless of pain would be markedly reduced. She was able to continue to work in restricted employment prior to the onset of the primary psychological injury, whilst her secondary psychological injury had commenced with the onset of pain in an unaccommodating work environment.”

Inadequacy of reasons

59. The claimant challenged this approach on two related bases. Her written submissions relied on the proposition that there was an absence of any reasoning identifying what was meant by “less than 1/6 of 15.5% WPI”, an uncertainty not assisted by the calculation reducing a 15% WPI by 2.5%, which was exactly 1/6^th.

60. The respondent resisted this challenge on the basis that the underlying circumstances had been outlined by Dr Baker and the evaluative judgment, involving medical expertise, was not susceptible to precise explanation. Counsel relied on similar reasoning in my judgment in Vitaz v Westform (NSW) Pty Ltd. ^[6] It should be observed, however, that that judgment predated the High Court’s explanation as to the adequacy of reasons given by a medical assessor in Wingfoot Australia Partners Pty Ltd v Kocak. ^[7] Further, it may be accepted that reasons which do not address a material matter may correctly reflect what the decision-maker had considered (and are therefore not deficient as reasons), but may indicate a failure to consider a relevant consideration, and thus provide a separate basis for setting aside the decision.

    6. [2011] NSWCA 254.

    7. (2013) 252 CLR 480; [2013] HCA 43 at [44]-[47].

61. While there is force in the respondent’s submission, it faces a hurdle in explaining the finding that the secondary psychological injury gave rise to a reduction of “less than 1/6” when that proportion appears to have been applied in full (though to a different WPI). However, the more important point is that the claimant’s second basis of challenge was not directed to the adequacy of reasons but to the panel’s failure to comply with the statutory scheme.

Applying the s 65A disregard

62. The claimant submitted that the lack of reasons reflected a failure to undertake the calculation in accordance with the Guidelines in assessing the current degree of permanent impairment attributable to the primary psychological injury. Taking the secondary injury into account, it was submitted, could not be abstracted from the assessment of the primary injury. Yet, the appeal panel did not undertake that exercise because it did not carry out the process mandated by the Guidelines in assessing the primary injury. The explanation for that no doubt lay in the statement by the appeal panel, prior to expressing its agreement with Dr Baker’s findings and reasons, that, “The appellant [employer] did not challenge the impairment assessments made by the [medical assessor]”. ^[8] To similar effect, Dr Baker had stated that, “The original whole person impairment is 17%”, from which he made a deduction for the secondary psychological injury.

    8. Appeal panel reasons, par 35.

63. As noted above, that exercise is not in accord with the language of s 65A. It is also inconsistent with the recent decision of the Court of Appeal (post-dating the appeal panel decision in this matter), Coca-Cola Europacific Partners API Pty Ltd v Pombinho. ^[9] In that case ground 4 before the appeal panel had “addressed the fact that no deduction was applied by the Medical Assessor for the purposes of s 323 of the [Workplace Injury Act]”. ^[10] Although not concerned with s 65A of the Workers Compensation Act, Ward P held:

“[86]   In any event, Ground 4 in my opinion suffices to bring the assessment of Mr Pombinho’s current whole person impairment within the scope of the grounds of appeal and hence within the jurisdiction of the Appeal Panel. That is because I accept the appellant’s submission that, in order to determine the impact of pre-existing injury on current whole person impairment, a comparative exercise was necessary and that it would be logically incoherent simply to begin the exercise from a fixed starting point (ie, the 24% whole person assessment made by the Medical Assessor) and then separately to consider the extent to which pre-existing injury contributed to that whole person impairment (and then to apply that amount to the fixed starting point) without considering the starting point itself. The approach required by the Guidelines is a subtractive approach, requiring a deduction from the starting point of whole person impairment but it would make the exercise artificial if, having been required to consider all of the material that the Medical Assessor had failed to consider, the Appeal Panel could not then revisit the starting point of the assessment.”

9. [2024] NSWCA 191; (Ward P, White and Stern JJA agreeing) (1 August 2024).

10. Pombinho at [21].

64. The application of s 65A provides a far stronger basis for that reasoning than the exercise required by s 323, just because it is not a “subtractive approach”. That is, even if one accepted that deductions could be made under s 323 from a fixed starting point, s 65A is only directed to the starting point. The reasoning in Pombinho applies a fortiori and, although arguably obiter, should be applied by this Court.

Materiality

65. If the proper exercise had been undertaken in accordance with the Guidelines, one possible outcome would have been that employability would have been reduced from class 4 to class 3, noting that the secondary psychological condition resulted from pain and a fear of exacerbation of pain and not from the imposition of a physical weight restriction, or the fact that her job applications failed, to which Dr Baker referred in dealing with the assessment of her secondary psychological injury. On that assumption, the aggregate score would reduce from 16 to 15 but the median class would not change. On that calculation the whole person impairment would be 15%.

66. The purpose of that calculation is not to suggest that it is correct, but rather, as the claimant submitted, that it is a plausible outcome, so that the error cannot be said to be immaterial.

67. The second challenge should be upheld and the determination and certificate set aside on that separate and independent ground.

Conclusions

68. The application for judicial review should therefore succeed. Although the orders were not sought precisely in these terms, the appropriate course is to set aside the determination of the appeal panel and to set aside the certificate issued by the Commission based on the determination of the appeal panel. The effect of those orders will be to leave the medical assessor’s certificate on foot, together with an unresolved application for review by an appeal panel.

69. The Court makes the following orders:

1. Set aside the determination of the Medical Appeal Panel, Workers Compensation Division, Personal Injury Commission, dated 17 May 2024.

2. Set aside the medical certificate issued by the Commission, based on the appeal panel determination, and dated 17 May 2024.

3. Order that the first defendant pay the plaintiff’s costs in this Court.

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Endnotes

Decision last updated: 18 March 2025