Moy v Emoleum Services Pty Ltd

[2015] NSWSC 1062

Supreme Court

New South Wales

Medium Neutral Citation:	Moy v Emoleum Services Pty Ltd [2015] NSWSC 1062
Hearing dates:	11 June 2015
Date of orders:	07 August 2015
Decision date:	07 August 2015
Jurisdiction:	Common Law
Before:	Davies J
Decision:	1. An order quashing the Certificate and Statement of Reasons issued by the Second Defendant, constituted by the Third Defendant on 10 October 2014. 2. An order remitting the matter to the Second Defendant for referral to a different Medical Appeal Panel to determine the dispute according to law. 3. The First Defendant is to pay the Plaintiff’s costs of the proceedings. 4. No order as to the costs of the Second and Third Defendants.
Catchwords:	ADMINISTRATIVE LAW – judicial review – workplace injury – assessment by medical assessor – appeal to Medical Appeal Panel – permanent impairment - assessment of pre-existing condition – whether adequate reasons provided for assessment and deduction – whether conclusion unreasonable – whether deduction based on assumption or hypothesis - whether pre-existing condition too difficult to assess – whether statutory 10% deduction at odds with the evidence
Legislation Cited:	Workers Compensation Act 1987 (NSW) Workplace Injury Management and Workers Compensation Act 1998 (NSW)
Cases Cited:	Campbelltown City Council v Vegan [2006] NSWCA 284 ; (2006) 67 NSWLR 372 Cole v Wenaline Pty Limited [2010] NSWSC 78 Elcheikh v Diamond Formwork (NSW) Pty Ltd (in liquidation) [2013] NSWSC 365 Khan v Minister for Immigration and Ethnic Affairs [1987] FCA 457; (1987) 14 ALD 291 Minister for Immigration v Eshetu [1999] HCA 21; (1999) 197 CLR 611 Minister for Immigration and Multicultural Affairs v SGLB Minister [2004] HCA 32; (2004) 78 ALJR 992 Re Minister for Immigration and Multicultural Affairs; Exp Applicant S20/2002 [2003] HCA 30; (2003) 77 ALJR 1165 Ryder v Sundance Bakehouse [2015] NSWSC 526 Vitaz v Westform (NSW) Pty Ltd [2011] NSWCA 254
Category:	Principal judgment
Parties:	Michael Moy (Plaintiff) Emoleum Services Pty Ltd (First Defendant) The Registrar of the Workers Compensation Commission of New South Wales (Second Defendant) Medical Appeal Panel, Appointed by Registrar of the Workers Compensation Commission of New South Wales, and constituted by Arbitrator Douglas, and Approved Medical Specialists Crane and Scougall (Third Defendant)
Representation:	Counsel: E Romaniuk SC & E Grotte (Plaintiff) J W Dodd (First Defendant) Submitting appearances (Second and Third Defendants) Solicitors: Farrell Lusher (Plaintiff) Hall & Wilcox Lawyers (First Defendant) Crown Solicitors Office (Second and Third Defendants)
File Number(s):	2014/380027

Judgment

1. The Plaintiff seeks judicial review of a decision of the Medical Appeal Panel of the Workers’ Compensation Commission. The certificate of the Panel with the Statement of Reasons was given on 10 October 2014.

Factual background

2. The Plaintiff suffered injury to his right knee and back in the course of his employment as a foreman of traffic control on 19 May 2008, when he tripped and fell into a drainage hole, and continued to roll about 10 feet down an embankment, coming to a rest at the bottom of a drain.

3. The Plaintiff noted immediate pain in his right knee associated with swelling, as well as lower back and left leg pain.

4. The Plaintiff returned to work, but the right knee symptoms of pain failed to improve.

5. An x-ray was taken on 4 June 2008, which demonstrated advanced medial tibiofemoral joint osteoarthritis, with mild osteoarthritis seen at the other compartments. He was treated with analgesic, but he continued to complain of pain.

6. An MRI was conducted on the right knee on 2 December 2008 which showed a chronic tear within the anterior cruciate ligament, as well as a tear of the posterior horn of the medial meniscus with a detached meniscal fragment, which was causing irritation to the bone and joint generally.

7. He underwent arthroscopic surgery on 6 July 2009, which confirmed the medial meniscus fragmented tear with a large anterior horn fragment protruding, as well as medial compartment osteoarthritis. The anterior horn fragment was removed, and the joint was washed out.

8. Following initial improvement in the symptoms of pain, the right knee deteriorated, resulting in reported feelings of instability, pain when weight-bearing, discomfort after walking, swelling and pain when turning in bed at night. A right total knee replacement was recommended to alleviate the symptoms, and this was undertaken on 2 November 2011. The insurer accepted liability for the right total knee replacement.

9. Prior to the right total knee replacement a claim for lump sum compensation in respect of permanent impairment resulting from the injuries received on 19 May 2008 was made on 22 October 2010. The claim was made in respect of both the lumbar spine and the right knee. Liability for the lumbar spine was disputed on 17 March 2011.

10. An Application to Resolve a Dispute was lodged in the Workers Compensation Commission ('the Commission') but those proceedings were discontinued on 20 July 2011.

11. A further claim was made for lump sum compensation in respect of permanent impairment on 18 September 2012 for both the right knee and the lumbar spine. Injury to the lumbar spine was still disputed.

12. An Application to Resolve a Dispute was lodged in the Commission on 20 February 2013.

13. On 10 March 2014 the Commission issued a Certificate of Determination pursuant to s 294 of the Workplace Injury Management and Workers Compensation Act 1998 (NSW) ('the 1998 Act'), inter alia, referring the medical dispute, being the dispute regarding the degree of permanent impairment (s 319 of the 1998 Act), to an Approved Medical Specialist (AMS) pursuant to s 321 of the 1998 Act. This was on the basis that liability for both injuries had been conceded (s 321(4)(a) of the 1998 Act).

14. The AMS issued a Medical Assessment Certificate (MAC) on 19 May 2014 in which he assessed 15 per cent whole person impairment ('WPI') for the right lower extremity (right knee), and 7 per cent WPI for the lumbar spine resulting from injuries sustained to those body parts on 19 May 2008. The AMS then applied a four-fifths deduction to the assessment for the right lower extremity resulting in an impairment rating of 3 per cent WPI, and a three-sevenths deduction to the assessment for the lumbar spine, resulting in an impairment rating of 4 per cent WPI. The final total WPI was 7 per cent.

15. Such an assessment precludes the Plaintiff from obtaining compensation for permanent impairment because it does not exceed 10 per cent WPI for the payment of lump sum compensation (s66(1) of the Workers Compensation Act 1987 (NSW) ('the 1987 Act')), and also precludes the Plaintiff from any 'work injury damages', which requires a threshold of 15 per cent WPI being reached (s151H of the 1987 Act).

16. Relevantly, the AMS explained the reason for the deduction in respect of the right lower extremity (right knee) at [11] of the MAC as follows:

As noted, Mr Moy was not being entirely open with me with regard to his previous history, noting that he was having problems with both knees particularly his right knee for at least 2 years prior to the fall in May 2008. In addition, there were no general practitioner's notes between May 2006 and March 2009. I have no doubt that he had ongoing problems with his right knee. In addition, as noted, x-rays taken at the time of his injury show Grade 4 osteoarthritis with bone on bone contact which in itself equates with 50% lower extremity impairment or 20% whole person impairment (see 10b). Theoretically then, one could deduct 20% whole person impairment from Mr Moy's present impairment due to his pre-existing condition but this is obviously counter-intuitive. I have therefore elected to make a deduction of four-fifths of the impairment of his right lower extremity leaving him with 3% whole person impairment as a result of the aggravation caused by the fall on 19 May 2008. I would certainly accept that his need for total knee replacement might well have been brought on earlier than might otherwise have been the case if not for the fall.

17. An appeal was brought by the Plaintiff from the MAC pursuant to s 327(3)(d) of the 1998 Act in respect of both the right lower extremity and the lumbar spine, on the basis that it contained a demonstrable error.

18. The Plaintiff submitted that the AMS had made incorrect adverse credit findings about the Plaintiff on the basis of an erroneous conclusion that the AMS did not have all the clinical records before him, and on the basis of his mistaken belief that there were missing clinical records regarding the right knee from the Plaintiff's treating general practitioners between 2006 and 2009.

19. The AMS did not accept the Plaintiff's evidence that he had not "had problems with his right knee in the past"; nor did he accept that the Plaintiff had not had ongoing problems with his right knee during that two-three year period between 2006 and 2009, on the basis that the AMS believed that he would have had ongoing problems with his right knee, despite there being no evidence to support such a conclusion.

20. The First Defendant opposed the appeal, but conceded that the AMS "failed to appreciate that the complete bundle [of clinical records] had been annexed to the reply", and was before the AMS.

21. The Second Defendant was satisfied that the appeal ought to proceed (s 327(4) of the 1998 Act) to the Third Defendant (“the Panel”) because at least one of the grounds for appeal had been made out.

22. The Panel issued its Statement of Reasons and MAC on 10 October 2014. The Panel revoked the earlier MAC on the basis that it found that the earlier MAC contained a demonstrable error.

23. The Panel stated in its Statement of Reasons:

23.   It is clear from the MAC that the AMS placed great weight on his mistaken belief that the full clinical records were 'inexplicably' not before him. They were. The AMS indicated that his seeing the GP's notes would have been 'very helpful' in determining the appellant's level of symptoms before injury. The AMS concluded, contrary to the appellant's report to him, and inconsistently with the GP's notes that were before him, that the appellant had been experiencing 'ongoing problems' with his right knee. This mistaken conclusion formed part of the AMS's reasoning regarding why he considered four-fifths of the appellant's whole person impairment relating to the appellant's knee is due to pre-existing osteoarthritis.

24.   The AMS's failure to have regard to the GP's notes that were before him is a demonstrable error. The AMS indicated that the notes were relevant. Even if the GP's notes had not been provided, given the importance the AMS considered they would have, the AMS ought to have called for the production of them relying on his power under section 324(1)(b) of the 1998 Act. In other words, even if as the AMS mistakenly believed the notes were not before him, given the importance he considered they would have, he would still have erred by not calling for them.

25.   The AMS's conclusion that the appellant had been suffering ongoing symptoms in his right knee prior to the injury is also a demonstrable error. It is inconsistent with what the appellant reported to the AMS. It is not corroborated by the GP notes, which in fact support the history the pellant provided to the AMS.

26.   Given that there are demonstrable errors in the MAC relating to the AMS's assessment of the proportion of the appellant's permanent impairment that is due to pre-existing condition, the Panel must re-assess that medical dispute.

24. The errors which the Plaintiff submits impugn the Panel’s decision, such that it is vitiated, are contained at [27] of the Statement of Reasons:

In terms of the assessment of the appellant's right lower extremity impairment, the Panel accepts the appellant's submission that he was not suffering symptoms in his right knee at the time he suffered his injury. The GP's notes indicate, as the appellant has highlighted in his submissions, that the appellant had not consulted his GP for knee pain for more than two years preceding his injury. However, the x-ray done shortly after the appellant's injury revealed bone on bone osteoarthritis in his right knee. That extensive osteo-arthritis was necessarily, in the Panel's view, present in the appellant's right knee at the time of injury, albeit it was asymptomatic at that particular time. It was rendered symptomatic by the appellant's injury. The surgery was necessary to get rid of the arthritic joint and replace it with an artificial joint which thereby provided the appellant substantial relief from his symptoms that had been precipitated by the injury. The appellant's impairment rating is based on his now having an artificial joint. In the circumstances, it is the Panel's view that the appellant's extensive and pre-existing osteoarthritis is an integral part of his present impairment. Again, it is not possible to determine precisely the extent of the proportion of the appellant's impairment that is due to the pre-existing but asymptomatic osteoarthritis and the extent due to aggravation of that disease by the injury. The best that can be done is to approximate this. In the Panel's view, having regard to the extensiveness of the osteoarthritis, the proportion of the appellant's permanent impairment that is due to the pre-existing disease is four-fifths. For completeness, the Panel notes that it would be too difficult to determine precisely the proportion, but in this case it would simply be at odds with the evidence to assume it is 10 per cent. (emphasis added)

Submissions

25. There are four relevant categories of errors identified in this paragraph. They are that the Panel:

(a)   made an erroneous finding and/or reached an erroneous conclusion by adopting the AMS's conclusion that a four-fifths deduction was appropriate in respect of the right lower extremity, when it had already found that that conclusion was based on a mistaken conclusion;

(b)   failed to take account of a relevant consideration, which is the body of material that was before it that supported a lesser deduction being made pursuant to s 323 of the 1998 Act, that is, the evidence that showed that the underlying osteoarthritis was asymptomatic at the time of the work-related injury to the right knee;

(c)   asked itself the wrong question, in that it asked whether the pre-existing osteoarthritis is an integral part of the assessed impairment, rather than asking itself what is the proportion of the assessed impairment that is due to any pre-existing condition or abnormality; and

(d)   failed to give any/or any adequate reasons, or set out its path of reasoning, as to what evidence was preferred or accepted in reaching the conclusion that the deduction pursuant to s 323 of the 1998 Act ought to be four-fifths, in circumstances where there was competing evidence, and the AMS had based his assessment on a mistaken conclusion.

(a)   First error – erroneous conclusion

26. The Plaintiff submitted there was no sufficient explanation nor reasons provided as to why the Panel adopted the approach it did. On the face of it, the approach was illogical, irrational and legally unreasonable. There was no probative evidence to support a finding of four fifths and the Panel did not identify such evidence. The assertion that the pre-existing condition was integral did not have the relevant causal character for the application of s 323 of the 1998 Act other than to demonstrate the presence of a pre-existing condition.

27. The First Defendant submitted that the Statement of Reasons makes it clear that the Panel did not adopt the reasoning of the AMS when it reached its conclusion of a four-fifths deduction. On the contrary, the Reasons show clearly that the Panel considered that the AMS had made demonstrable errors.

28. The First Defendant submitted that, although it was not possible to determine precisely the extent of the Plaintiff’s impairment due to pre-existing osteoarthritis and while it was difficult to determine it precisely that did not mean that the two orthopaedic surgeons on the Panel could not use their expertise to determine that the assumption of 10% was at odds with the available evidence.

29. Further, the First Defendant submitted that the Plaintiff’s complaint that reaching a conclusion of a four-fifths deduction was wrong, and illogical, was premised on the assertion that the AMS was correct in assessing four-fifths on the evidence he had available to him but did not have regard to. That is, if the AMS was correct in finding that the Plaintiff had ongoing problems with his knee at the time of the injury, he was still wrong in assessing four-fifths as the deduction.

(b)   Second error – failing to take account of a relevant consideration

30. The Plaintiff submitted that the evidence which the Panel failed to consider was the Plaintiff’s evidence that he was not suffering symptoms in the right knee at the time of his injury, the clinical records of the general practitioner that supported his evidence that his right knee was asymptomatic at the time of the injury, and the evidence that supported the finding that the injury precipitated persistent symptoms requiring treatment.

31. The Plaintiff submitted that although the Panel expressly referred to that evidence, the Panel’s engagement with it was not “proper, realistic and genuine”, echoing the requirements stated by Gummow J in Khan v Minister for Immigration and Ethnic Affairs [1987] FCA 457; (1987) 14 ALD 291. This was because the Panel’s focus was directed to the finding it made that the present impairment rating was based on his now having an artificial joint, and the finding that the surgery for a total knee replacement was to get rid of the arthritic joint.

32. The Plaintiff submitted that in the face of the evidence constituting the relevant consideration, the reinstating of the AMS finding of four fifths was illogical, irrational and legally unreasonable.

33. The First Defendant submitted that the Statement of Reasons shows clearly that it accepted that the Plaintiff was asymptomatic prior to the injury. It follows that the Panel took that evidence into account when reaching its decision. The findings the Panel made were not illogical, irrational or unreasonable because it did not adopt the conclusion of the AMS.

34. The question the Panel had to answer was not “what impairment results from the soft tissue injuries suffered” (because soft tissues had been taken away), but “what impairment results from the total knee replacement” (accepted now at 15%) and “what proportion of the impairment should be deducted that is due to any pre-existing condition. The significant matter was, the First Defendant submitted, that by the time it came to prepare its Reasons the Plaintiff had undergone a total knee replacement. That was what the Panel had to deal with in making its assessment.

(c)   Third error – asking the wrong question

35. The Plaintiff submitted that the Panel first found that the pre-existing osteoarthritis was an integral part of his present impairment because the surgery was necessary to get rid of the arthritic joint and to replace it with an artificial joint. The Panel then stated that the Plaintiff’s impairment rating was based on his having an artificial joint, that it was not possible to be precise and that the best that could be done was to approximate the proportion of impairment due to the pre-existing condition.

36. The Plaintiff submitted by approaching its task in this way the Panel fell into error by asking itself the incorrect questions of “what is the impairment resulting from the artificial joint?” and “what part did the pre-existing osteoarthritis play in the injury necessity for the artificial joint?”. The correct questions were “What is the impairment resulting from the work injury?” and “What proportion of that impairment is due to the pre-existing condition?”

35. The First Defendant submitted that, as paragraph [26] of the Statement of Reasons makes clear, it determined that it had to re-assess the medical dispute because of the error made by the AMS and it asked itself the right question, namely, what was the deduction to be made for the pre-existing condition or abnormality, in accordance with s 323(1).

(d)   Fourth error – inadequate reasons

38. The Plaintiff submitted that the Panel failed to provide reasons or adequate reasons as to why it assessed the deduction under s 323(1) as four-fifths, particularly in the light of its having agreed that the AMS’s assessment of four- fifths was based in part on an erroneous finding. Stating that the pre-existing condition was an integral part of the present impairment was not an explanation of how the deduction of four-fifths reflected the contribution made by the pre-existing osteoarthritis to the impairment after the injury.

39. The First Defendant submitted that its reasoning was clearly exposed. In particular the Statement of Reasons show that the four-fifths deduction was based on the Plaintiff’s “extensive and pre-existing osteoarthritis” being an integral part of his present impairment. In setting out its acceptance of the evidence and providing those reasons the Panel complied with its obligations identified in Campbelltown City Council v Vegan [2006] NSWCA 284 ; (2006) 67 NSWLR 372.

Consideration

40. At the outset of the hearing Mr Dodd of counsel for the First Defendant sought to cross-examine the solicitor for the Plaintiff who had sworn an affidavit annexing the evidentiary material relevant to the Panel’s decision. The particular matters about which he sought to cross-examine were two entries on 3 and 11 April 2006 where the general practitioner referred to having prepared letters which were apparently sent to the First Defendant’s solicitor in these proceedings. The letters were said not to have been produced anywhere. The First Defendant did not know whether the letters concerned the knee problem the subject of the present proceedings or whether they were in relation to something else entirely. Mr Dodd said that the Plaintiff had had other accidents. He said that the matter went to my discretion whether or not, if I found error, to send the matter back to the Panel for reconsideration.

41. I declined to permit cross-examination and I said that I would include my reasons for doing so in this judgment.

42. The issue appears to me to be a simple one. If I find error in relation to the way the Panel went about its decision-making I would ordinarily quash the certificate and direct the Panel to consider the matter according to law. It would open at that time for the letters referred to on these dates to be called for and placed before the Panel if they are relevant to the knee injury. If I was of the opinion that there was no error in the Panel’s decision-making the letters would cease to have relevance.

43. An application of the present type is not a merits review of the matter before the Panel. The consideration is only one of the procedure and decision- making process adopted by the Panel as is evidenced in the report of the Panel. It would not assist me to have additional material that was not before the Panel.

44. Section 323 of the 1998 Act deals with the deduction for a previous injury or a pre-existing condition. That section relevantly provides:

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.

45. The approach to the task was explained in Elcheikh v Diamond Formwork (NSW) Pty Ltd (in liquidation) [2013] NSWSC 365 by Schmidt J who said:

[123]   The first defendant's case was that a fair reading of the medical specialist's reasons showed that he was not attempting to determine causation. It was submitted that the medical specialist's entire discussion was about the extent of any contribution to Ms Elcheikh's impairment as a result of his work, rather than his underlying condition, but that his assessment was not directed to the issue of liability. It was the extent of the contribution of the work injury, in respect of which he was being given the benefit of the doubt, when his permanent impairment was being assessed. That was how the Appeal Panel had read his reasons and it was entitled to agree with him as it did.

[124]   This submission, it seems to me, underscores the problem with the approach adopted by both the medical specialist and the Appeal Panel to the matters which they each had to determine in relation to Mr Elcheikh's claim and on appeal. The legislative scheme required the medical specialist to determine Mr Elcheikh's deductible proportion, not by reference to his workplace injury, but rather by determining what contribution the pre-existing condition had made to the permanent impairment which had resulted from that injury.

[125]   The starting point of a medical assessment conducted under s 322 is that the impairment being assessed resulted from an injury suffered at work. Under s 323, the medical specialist is not called upon to determine whether the resulting impairment was contributed to by that work. The assessment proceeds on the basis that it did.

[126]   As discussed in Cole v Wenaline Pty Limited at [30], in the case of a workplace injury caused by an exacerbation or acceleration of a pre-existing condition, what must be determined by a medical specialist under s 323 is:

Firstly, what the extent of the resulting impairment is.

Secondly, whether the pre-existing condition contributed to the impairment.

Thirdly, if it did, what proportion of the impairment was due to the pre-existing condition.

[127]   The statutory scheme recognises that this may be a difficult exercise and so provides a mechanism for its resolution, in s 323(2). If a medical specialist considers that it to be either difficult or costly to determine the contribution to the impairment which the pre-existing condition has made, the assumption provided by s 323(2) has to be applied by the medical specialist. That is, the contribution has to be assessed to be 10%, unless that is considered to be at odds with the available evidence.

[128]   That was not the way in which the medical specialist approached his task. Instead, he focussed on the contribution of the work to the impairment. This approach was challenged on appeal. The Appeal Panel did not consider or resolve that challenge. In the result it again fell into error.

46. The Panel said at [27] of its Statement of Reasons that it accepted the Plaintiff’s submission that he was not suffering symptoms in his right knee at the time he suffered his injury. That does not result in no finding of a deduction for a pre-existing condition.

47. In Vitaz v Westform (NSW) Pty Ltd [2011] NSWCA 254 it was made clear that, even though a pre-existing condition may have been asymptomatic, if it is a contributing factor to the permanent impairment then a deduction is required. Basten JA (with whom McColl JA and Handley AJA agreed) said:

[42]   The appeal to the Appeal Panel did not expressly identify an erroneous failure to give reasons. Rather, the submissions on the appeal, which appear to set out the grounds of challenge, complained that there can be no deduction under s 323, as a matter of law, in the absence of a pre-existing physical impairment. It was further submitted, by reference to the opinion of three medical commentators in a local publication:

"If a worker develops permanent pain and symptoms due to work consistent with spondilosis in the neck region, that condition might be assessed at DRE II. Although the spondilosis is likely to have been degenerative, if there were no symptoms in the period prior to the work related complaint, then there was no rateable impairment at that time. So nothing would be subtracted from the current impairment."

[43]   That opinion contained a legal assumption which is inconsistent with the approach adopted by this Court in, for example, D'Aleo v Ambulance Service of New South Wales (NSWCA, 12 December 1996, unrep) (quoted by Giles JA, Mason P and Powell JA agreeing, in Matthew Hall Pty Ltd v Smart [2000] NSWCA 284; 21 NSWCCR 34 at [30]-[32] and, more recently, by Schmidt J in Cole v Wenaline Pty Ltd [2010] NSWSC 78 at [13]). The resulting principle is that if a pre-existing condition is a contributing factor causing permanent impairment, a deduction is required even though the pre-existing condition had been asymptomatic prior to the injury. …

48. It is not suggested in the present case that the Panel did not adopt this approach when dealing with the second step identified in Elcheikh. The errors were said to have taken place at the time the Panel dealt with the third step.

49. As noted earlier, the Plaintiff was critical of the Panel saying that the pre-existing condition was an “integral” part of his present impairment. That criticism relied on what Campbell J said in Ryder v Sundance Bakehouse [2015] NSWSC 526:

[44]   The argument is related to the first issue and may be characterised as a misdirection point. The question that the Panel were required to ask, and answer, was whether any proportion of the 15 per cent impairment assessed as resulting from the work injury was due to the pre-existing abnormality in Ms Ryder’s L5/S1 disc “that in all likelihood” the Panel considered pre-dated the injury. With respect, the Panel’s statement of reasons does not explain the actual path by which the Panel reasoned to the conclusion that “in all likelihood” there was a pre-existing abnormality in Ms Ryder’s L5/S1 disc. The Panel seemed to have accepted the views of the AMS that the desiccation shown on the 2010 MRI scan (the AMS did not refer to the 2008 scan) “pre-dated” the accident. The reasoning (Panel reasons [18]; see [30] above) then continues that the trauma of lifting the heavy box “caused this abnormal disc to protrude and hence the pre-existing abnormal disc was an integral part of the appellant’s disorder that necessitated her surgery”. The Panel goes on to explain that because of this “the appellant’s pre-existing abnormal disc necessarily contributes to her present impairment” (my emphasis). With respect, there is a certain circularity in the conclusion that “her pre-existing pathology is an integral part of her present impairment, and therefore contributes now to her impairment”.

[45]   What s 323 requires is an inquiry into whether there are other causes, (previous injury, or pre-existing abnormality), of an impairment caused by a work injury. A proportion of the impairment would be due to the pre-existing abnormality (even if that proportion cannot be precisely identified without difficulty or expense) only if it can be said that the pre-existing abnormality made a difference to the outcome in terms of the degree of impairment resulting from the work injury. If there is no difference in outcome, that is to say, if the degree of impairment is not greater than it would otherwise have been as a result of the injury, it is impossible to say that a proportion of it is due to the pre-existing abnormality. To put it another way, the Panel must be satisfied that but for the pre-existing abnormality, the degree of impairment resulting from the work injury would not have been as great.

…

[54]   Section 323 as I have already said, requires there to be a deduction for any proportion of the impairment that is due to any pre-existing condition. This is an essential element of the section; indeed it is the pith of it. It is not enough to simply identify that there is a pre-existing condition and that there has been a subsequent impairment and therefore make a deduction under this section because of the existence of the pre-existing condition. Such reasoning fails to consider a necessary condition of the operation of the section; that a proportion of the permanent impairment is due to the pre-existing condition. (emphasis added)

50. Whilst I consider that it is unfortunate that the Panel failed to refer to the words of the section in performing its task, which was to deduct from its assessment of permanent impairment any proportion of the impairment “that is due to any pre-existing condition”, and that it referred to the pre-existing condition as integral to the present impairment, I do not see that those matters themselves constitute error if, at that point, the Panel was carrying out the second step in Elcheikh. Describing the pre-existing condition as integral in that way is simply another way of saying that the pre-existing condition contributed to the impairment. The Plaintiff appeared to accept that this was so but submitted that the use of “integral” at the third stage was an error.

51. I find, however, that the Panel fell into error at the time it performed the third step identified in Elcheikh, that is, assessing what proportion of impairment was due to the pre-existing condition. In my opinion three errors are established. First, the reasons given by the Panel are entirely inadequate. Secondly, to the extent that any reasons are given, the deduction was based on assumption or hypothesis. Thirdly, the conclusion is not supported by probative or logical grounds.

52. As far as the absence of adequate reasons is concerned, the only reason given for the conclusion is “the extensiveness (sic) of the osteoarthritis”. The Panel does not elaborate on the extent of the osteoarthritis. They referred earlier in paragraph [27] to an x-ray done shortly after the Plaintiff’s injury which revealed “bone on bone osteoarthritis” in the right knee. The x-ray report in fact did not use that description but that was Dr Bodel’s conclusion from having examined the scan (that description appears in his report of 16 July 2010 which the Panel had).

53. In the light of the Panel’s determination that the precise proportion would be too difficult to determine, the starting point ought to have been s 323(2). If the proviso was to be applied, which is what ultimately happened, the 10% assumption had to be at odds with the available evidence. The available evidence is identified but how it was used to reach the conclusion of four-fifths is not disclosed. The requirement for adequate reasons was heightened in the present case because the AMS had deducted four-fifths for the pre-existing condition and that conclusion was said by the Panel to have been brought about by a mistaken conclusion on the AMS’s part. The Panel said:

The AMS concluded, contrary to the appellant's report to him, and inconsistently with the GP's notes that were before him, that the appellant had been experiencing 'ongoing problems' with his right knee. This mistaken conclusion formed part of the AMS's reasoning regarding why he considered four-fifths of the appellant's whole person impairment relating to the appellant's knee is due to pre-existing osteoarthritis.

54. If the error about one matter (the Plaintiff experiencing ongoing problems with the right knee at the time of the injury) contributed to the conclusion of a four-fifths deduction, one could expect cogent reasons for the Panel to reach the same result even although it took into account the evidence that it had and which was before the AMS and should have been taken into account by him. As Basten JA said in Campbelltown City Council v Vegan at [121]:

More importantly, where more than one conclusion is open, it will be necessary for the Panel to give some explanation of its preference for one conclusion over another. That aspect may have particular significance in circumstances where the medical members of a Panel have made their own assessment of the applicant’s condition and have come to a different conclusion from that reached by other medical practitioners, as set out in reports provided to the Panel.

55. In Vitaz in the passage immediately following what is set out at [47] above, the Court said:

In the absence of any medical evidence establishing a contest as to whether the pre-existing condition did contribute to the level of impairment, the complaint about a failure to give reasons must fail. An approved medical specialist is entitled to reach conclusions, no doubt partly on an intuitive basis, and no reasons are required in circumstances where the alternative conclusion is not presented by the evidence and is not shown to be necessarily available.

56. In the present case there was a contest about whether the pre-existing condition contributed to the level of impairment and, if so, to what extent. The result must be that reasons must be provided for the conclusion reached even if intuition from experience forms some part of the process.

57. Further, recognising that s 323(2) had at least to be considered, the Panel said only “it would simply be at odds with the evidence to assume it is 10 per cent”. The evidence is not identified, nor is it said how that evidence would mean that 10 per cent was not appropriate, nor how four-fifths was appropriate.

58. The reasons provided for the deduction were inadequate. Error is thereby demonstrated.

59. The second error involves reliance by the Panel on assumption and hypothesis. In Cole v Wenaline Pty Limited [2010] NSWSC 78 Schmidt J said:

[29]   As the plaintiff argued, to so approach the exercise required to be undertaken by s 323, was to fall into an error of law. The section is directed to a situation where there is a pre-existing injury, pre-existing condition or abnormality. For a deduction to be made from what has been assessed to have been the level of impairment which resulted from the later injury in question, a conclusion is required, on the evidence, that the pre-existing injury, pre-existing condition or abnormality caused or contributed to that impairment.

[30]   Section 323 does not permit that assessment to be made on the basis of an assumption or hypothesis, that once a particular injury has occurred, it will always, ‘irrespective of outcome’, contribute to the impairment flowing from any subsequent injury. The assessment must have regard to the evidence as to the actual consequences of the earlier injury, pre-existing condition or abnormality. The extent that the later impairment was due to the earlier injury, pre-existing condition or abnormality must be determined. The only exception is that provided for in s 323(2), where the required deduction ‘will be difficult or costly to determine (because, for example, of the absence of medical evidence)’. In that case, an assumption is provided for, namely that the deduction ‘is 10% of the impairment'. Even then, that assumption is displaced, if it is at odds with the available evidence.

[31]   The reason for this statutory approach can readily be seen. It is entirely possible that a person could suffer such a catastrophic injury, that the presence or absence of any previous injury, pre-existing condition or abnormality, would make no difference at all to the impairment which resulted from the later injury. An injury which results in death, is an obvious example, albeit not one which would arise for consideration under this section. A more relevant example, in this case, is a second injury which severed the spine. Or, as was discussed in the authorities, an earlier injury which was asymptomatic, may or may not contribute to the impairment which results from a second injury. That is a matter of fact to be assessed on the evidence led in each case. An assumption of the kind here made, namely that surgery to the lumber spine, irrespective of outcome, must always result in a level of residual impairment which contributes to the level of impairment which follows a later injury, has no role to play in that assessment. What must be determined on the evidence is whether any proportion of the permanent impairment present after the second injury was due to the earlier injury. (emphasis added)

60. The Panel said “it is not possible” to determine precisely the extent of the impairment due to the pre-existing osteoarthritis and that the best that could be done was to “approximate” this. They also noted that it would “too difficult to determine” precisely the proportion, and “it would simply be at odds with the evidence to assume it is 10 per cent”. What little reasoning there is seems to suggest is that because there was extensive pre-existing arthritis there must have been impairment to a marked degree. An assessment of four-fifths tends to support this view.

61. I agree with the Plaintiff’s submission that, in that way, the Panel made the assessment on an assumption or hypothesis that because there was extensive pre-existing osteoarthritis that meant that there was extensive impairment. The matter, in that regard, is not distinguishable from what was said in Cole at [30] and [31], such approach being approved in Vitaz at [30].

62. As to the third error, the Panel assessed the same proportion for the deduction as the AMS where that proportion was said to have been based on an erroneous conclusion. In the absence of adequate reasons, that outcome can only be said not to be supported by some probative or logical grounds: Minister for Immigration v Eshetu [1999] HCA 21; (1999) 197 CLR 611 at [147]. It could also be described as illogical, irrational and legally unreasonable: Re Minister for Immigration and Multicultural Affairs; Exp Applicant S20/2002 [2003] HCA 30; (2003) 77 ALJR 1165 at [37] and [52] but cf [4], [5] and [9]; Minister for Immigration and Multicultural Affairs v SGLB Minister [2004] HCA 32; (2004) 78 ALJR 992 at [38]. Whatever terminology is employed, error is demonstrated.

63. That conclusion is not to accept the Plaintiff’s characterisation of the Panel adopting the AMS’s assessment. Demonstrably the Panel did not do that. In paragraph [29] of its Reasons, although dealing with the other matter which is not in dispute in these proceedings, the Panel said:

A ground of appeal having been established, the process of then re-assessing the medical dispute does not start with any predilection or preference towards what the AMS assessed.

64. The problem is, however, that the outcome, without adequate reasons for it, is on its face illogical and irrational. Nor does that criticism assume the correctness of the AMS’s assessment in the manner the First Defendant submitted.

65. Although it is not strictly necessary to consider the other bases in respect of which the Plaintiff asserts error I will say something briefly about them.

66. As far as the asserted error that the Panel asked itself the wrong question is concerned, the inadequacy of the reasons leave it unclear whether error has occurred. As discussed earlier, if the notion of the pre-existing osteoarthritis being integral to the Plaintiff’s present impairment is related to the second step in Elcheikh, although the terminology is unfortunate, I do not think that error is demonstrated. However, the placement of the reference to the “integral part” of his present impairment suggests that the Panel may at that point be engaging in the third step of determining what proportion is due to the pre-existing condition.

67. I cannot be satisfied, because of the inadequacy of the reasons, whether error has occurred by the reference to the “integral part”. It is not clear what question the Panel was asking at that point and for what purpose. However, it is not necessary to determine this matter because error is demonstrated by the inadequacy of the reasons in any event.

68. Nor I am persuaded that the Panel has failed to have regard to a relevant consideration. What appears at [27] of the Statement of Reasons demonstrates that the Panel did have regard to the relevant material. I do not think that it can be said that the Panel did not give “proper, realistic and genuine” consideration to the material. The fact that the Panel drew a conclusion from the material that was ultimately unfavourable to the Plaintiff (the four-fifths deduction) does not, of itself, mean that proper consideration was not given to the material. Express mention was made of the relevant evidence. Although I have held that the conclusion reached was irrational and illogical, that does not necessarily mean that proper attention and regard was not had to the evidence concerned. The conclusion was likely reached because of the way the evidence was used, not by a failure to have proper regard to it.

Conclusion

69. In addition to orders in the nature of certiorari and mandamus the Plaintiff seeks a declaration that the Certificate and Statement of Reasons are void. Where those orders are to be made no point is served by such a declaration, as the Plaintiff came to accept.

70. I make the following orders:

1. An order quashing the Certificate and Statement of Reasons issued by the Second Defendant, constituted by the Third Defendant on 10 October 2014.

2. An order remitting the matter to the Second Defendant for referral to a different Medical Appeal Panel to determine the dispute according to law.

3. The First Defendant is to pay the Plaintiff’s costs of the proceedings.

4. No order as to the costs of the Second and Third Defendants.

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Decision last updated: 07 August 2015