Neader v The Trustee for Vestito Unit Trust t/as TS 14 Plus Australia Pty Ltd

[2025] NSWSC 866

Supreme Court

New South Wales

Medium Neutral Citation:

Neader v The Trustee for Vestito Unit Trust t/as TS 14 Plus Australia Pty Ltd [2025] NSWSC 866

Hearing dates:

8 July 2025

Date of orders:

5 August 2025

Decision date:

05 August 2025

Jurisdiction:

Common Law

Before:

Schmidt AJ

Decision:

(1)   The Panel’s certificate and reasons be set aside.

(2)   The matter be referred to the President of the Personal Injury Commission to be dealt with according to law.

(3)   Unless the parties approach within 14 days with short written submissions, the defendant is to bear Ms Neader’s costs as agreed or assessed.

Catchwords:

ADMINISTRATIVE LAW – judicial review of decision of Appeal Panel of the Personal Injury Commission – s 323 Workplace Injury Management and Workers Compensation Act 1998 (NSW) – where applicant had pre-existing health condition – whether the Appeal Panel correctly applied s 323 – whether Appeal Panel gave adequate reasons – decision of Appeal Panel set aside

Legislation Cited:

Workplace Injury Management and Workers Compensation Act 1998 (NSW)

Cases Cited:

Campbelltown City Council v Vegan (2006) 67 NSWLR 372; [2006] NSWCA 284

Cole v Wenaline Pty Limited [2010] NSWSC 78

Kempe v Complete Community Services Pty Ltd [2022] NSWSC 1095

McGinn v Ashfield Council [2012] NSWCA 238

Minister for Immigration & Ethnic Affairs v Liang (1996) 185 CLR 259; [1996] HCA 6

New South Wales Land and Housing Corp v Orr (2019) 100 NSWLR 578 [2019] NSWCA 231

Ryder v Sundance Bakehouse [2025] NSWSC 526

Southwell v Qantas Airways Limited [2024] NSWSC 497

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

Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 487; [2013] HCA 43

Category:

Principal judgment

Parties:

Margaret Estelle Neader (Plaintiff)
The Trustee for Vestito Unit Trust t/as TS 14 Plus Australia Pty Ltd (First Defendant)
President of Personal Injury Commission of NSW (Second Defendant)

Personal Injury Commission t/as Medical Appeal Panel (Third Defendant)

Representation:

Counsel:
EG Romaniuk SC and S Moffet (Plaintiff)
D C Roberts (First Defendant)

Solicitors:
Walker Law Group (Plaintiff)
Gair Legal (First Defendant)
Crown Solicitors (Second and Third Defendants)

File Number(s):

2024/466800

Publication restriction:

Nil

JUDGMENT

1. In October 2021 Ms Neader, then aged 64, suffered an injury to her left knee when she twisted it while working as a manager at a retail shop which was being prepared to re-open after the Covid 19 lockdown. The injury occurred while she was lifting bags of rubbish to place into a bin. She continued to work for about half an hour, the remainder of her shift, but soon afterwards noticed developing swelling and pain in her knee.

2. Ms Neader later pursued a workers compensation claim and ultimately had a knee replacement in November 2022. She was assessed by Dr Hunt who concluded that she had suffered whole person impairment of 20%. Later Professor Miniter concluded that she had suffered 0% whole person impairment, the knee replacement not having been caused by her work. They not agreeing about the consequences of her previously asymptomatic osteoarthritis.

3. Ms Neader pursued the resulting medical dispute in the Personal Injury Commission under the Workplace Injury Management and Workers Compensation Act 1998 (NSW). Medical Assessor Kuru concluded that she had suffered whole person impairment of 14% as the result of the knee replacement and applied a one-third deduction for her pre-existing osteoarthritis: s 323.

4. Ms Neader appealed and was referred to a Medical Appeal Panel, complaining that the Assessor had erred in considering the evidence; in the criteria applied to arrive at the deduction made; and in failing to give adequate reasons for his decision. The Panel concluded that the Assessor had erred, but it still confirmed the assessment.

5. Ms Neader now pursues judicial review of the Appeal Panel’s decision, seeking orders setting aside its determination and remitting the matter to the Personal Injury Commission to be decided according to law. The grounds of review pressed are that the Panel incorrectly approached the question of whether to apply a deduction and that its reasoning was also inadequate.

Issues

6. There are no issues between the parties about the applicable law. It was AMA5 Table 17.35, which regulated how Ms Neader’s total knee replacement had to be assessed and s 323 of the Act which regulated how a deduction for her pre-existing arthritic condition had to be made.

7. What is in issue is whether the Appeal Panel correctly followed the requirements of s 323, which was explained in Ryder v Sundance Bakehouse [2025] NSWSC 526. As well as whether the reasons the Panel gave were inadequate, which the defendant also disputed.

What did s 323 require?

8. The section 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.

(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.”

9. In Ryder the operation of s 323 was explained by reference to Southwell v Qantas Airways Limited [2024] NSWSC 497 at [50] and earlier authority. The section involving, at least, three enquiries:

“•   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.”

10. As also explained in Southwell at [51]-[58], this requires a consideration of whether the pre-existing condition contributed causally to the impairment suffered as the result of the workplace injury, as well as whether a portion or part of that level of impairment was due to the pre-existing condition, rather than the workplace injury.

11. However, even if before a workplace injury a pre-existing condition was asymptomatic, a deduction will be required if some portion of the level of impairment following injury was due to the pre-existing condition, rather than to the injury: Vitaz v Westform (NSW) Pty Ltd [2011] NSWCA 254 at [43].

12. Still there are some cases where the presence or absence of any previous injury, pre-existing condition or abnormality, can make no difference at all to the impairment which results from a later injury: Cole v Wenaline Pty Limited [2010] NSWSC 78 at [30]-[31]. The example there given being a second injury which severed the spine.

13. Section 323 thus does not permit assumptions to be made but requires a determination on the evidence of “whether any proportion of the permanent impairment present after the second injury was due to the earlier injury.”

The parties’ cases

14. Ms Neader’s case was that while she had developed some degenerative changes before her workplace injury as the result of her arthritis, she did not earlier have symptomatic pain or limitations in her knee. The injury she suffered at work did not respond to conservative management, with the result that eventually her knee deteriorated to the point that she required a total knee replacement.

15. The result was that after the surgery her impairment had to be assessed in accordance with AMA5 Table 17.35, the medical evidence having established that the surgery was causally related to her workplace injury. The evidence also established that her subsequent impairment was not greater because of her pre-existing condition, with the result that no deduction was required to be made for it on the assessment under s 323. Logically the implantation of the prosthetic device in her knee having dealt with all of her pathology, including all she had suffered before the workplace injury.

16. In her case, given her knee replacement, the level of impairment which she was suffering afterwards was not the result of or contributed to by her pre-existing arthritis, being entirely the result of the replacement. Her pre-existing arthritis not impacting the performance of the device following implantation, the Panel did not find that its performance had been affected by her pre-existing arthritic condition. In the result in making a deduction, it had not complied with s 323.

17. In arriving at its conclusions the Panel had failed to address the statutory test and the case she advanced in light of the relevant evidence. Nor had it explained its reasons for the findings which it made, on which its conclusions rested, in the required way.

18. The defence case was that the Panel had not fallen into the alleged errors. The knee replacement did not preclude a deduction for Ms Neader’s pre-existing condition and she had in fact conceded that some level of deduction was appropriate.

19. The Panel had accepted that the assessor’s reasons had been inadequate but agreed with his conclusions, having considered the evidence. Its view was that considerably more than a 10% deduction was warranted, accepting that the 30% the assessor had arrived at was appropriate.

20. Its reasons, read in the context of what it was called on to decide were adequate, they not being able to be examined with an eye keenly attuned to error: McGinn v Ashfield Council [2012] NSWCA 238 at [17]. While not extensive they were adequate.

What did the Panel decide?

21. The Panel gave its reasons shortly. Having explained the background to its review, it indicated that it had before it all of the documents the assessor had been sent, but it did not explain what they were or what they established. It referred to the medical certificate the assessor had issued and the parties’ written submissions, which it summarised:

“13.   Both parties made written submissions. They are not repeated in full but have been considered by the Appeal Panel.

14.   In summary, the appellant submits that although she had significant pre-existing pathology in her left knee by way of osteoarthritis, it was asymptomatic in the immediate lead up to the injury. While she concedes the degree of the applicable deduction is difficult or costly to determine, a deduction of 10% is not at odds with the available evidence given the significant mechanism of the loaded twisting injury suffered by the appellant.

15.   The appellant submits the Medical Assessor made a demonstrable error in providing insufficient reasons for determining “the mechanism of injury at work is unlikely to have led to any significant injury”. She submitted the Medical Assessor applied incorrect criteria in making a 30% deduction and did not provide adequate reasons in failing to set out which portion of the damage to the knee as demonstrated in the MRI was attributable to the injury and to the pre-existing pathology.

16.   In reply, the respondent submits that the mere fact the appellant’s knee was asymptomatic before injury is not conclusive of the absence of an appropriately deductible pre-existing condition. It submitted the Medical Assessor provided adequate reasons and stated in unambiguous terms that had it not been for the advanced degenerative state of the knee, the injurious incident at work would have been minor in nature. The respondent submitted the Medical Assessor’s reasons did not contain any demonstrable error or application of incorrect criteria.”

22. The Panel then shortly explained its findings and reasons, it is convenient to also quote them in their entirety:

“17.   The procedures on appeal are contained in s 328 of the 1998 Act. The appeal is to be by way of review of the original medical assessment but the review is limited to the grounds of appeal on which the appeal is made

18.   In Campbelltown City Council v Vegan [2006] NSWCA 284 the Court of Appeal held that the Appeal Panel is obliged to give reasons. Where there are disputes of fact it may be necessary to refer to evidence or other material on which findings are based, but the extent to which this is necessary will vary from case to case. Where more than one conclusion is open, it will be necessary to explain why one conclusion is preferred. On the other hand, the reasons need not be extensive or provide a detailed explanation of the criteria applied by the medical professionals in reaching a professional judgement.

19. In this matter, the Medical Assessor erred in failing to state how the mechanism of injury at work is likely to have led to significant injury or set out how much of the damage demonstrated on the post-injury MRI was due to pre-existing condition and how much attributable to the injury. In these circumstances, the Appeal Panel has conducted a review of the clinical material including the radiological material before it in assessing the degree of appropriate deduction pursuant to s 323 of the 1998 Act.

20.   The absence of symptoms is not conclusive of an absence of pre-existing condition: see D'Aleo v Ambulance Service of New South Wales (NSWCA, 12 December 1996, unrep); Matthew Hall Pty Ltd v Smart [2000] NSWCA 284 21 NSWCCR 34 at [30]- [32]; Cole v Wenaline Pty Ltd [2010] NSWSC 78 at [13], and Vitaz v Westform (NSW) Pty Ltd [2011] NSWCA 254 at [42] to [43]). It is apparent from an examination of the radiological material that there was “moderate severe medial compartment osteoarthritis” and “severe patellofemoral compartment osteoarthritis.” Those findings are consistent with the presence of longstanding pre-injury pathology in the inured body part.

21.   The MRI taken some three weeks post-injury is non-weight bearing. The appearance of the arthritis in the medial compartment of the knee will therefore appear less severe than would likely be seen on a weight bearing film.

22. Dr Gill, treating orthopaedic surgeon noted the presence of significant osteoarthritis in the knee which had been aggravated by the appellant’s injury. The presence of that arthritis is admitted by the appellant in her submissions. Dr Gill’s observations are broadly consistent with the records of the general practitioner dated 10 November 2021 that the appellant had injured her knee and the problem with it was a result of severe osteoarthritis. Those findings are consistent with those of the Medical Assessor and support the proposition that there was significant pre-existing pathology sufficient to warrant a significantly larger deduction than the default 10% under s 323.

23.   Put simply; in considering the available radiological and clinical material, it would not be possible for the degree of demonstrated arthritis to develop in so short a space of time following an injury in the nature of that suffered by the appellant.

24.   On balance, notwithstanding the Medical Assessor’s error in failing to provide adequate reasons for his decision, the totality of the treating medical material including radiology, the IME reports and lay evidence support a finding of a deduction in accordance with that found by the Medical Assessor in the amount of 30%.

25.   For these reasons, the Appeal Panel has determined that the MAC issued on 20 May 2024 is confirmed.”

Did the Panel err in its application of s 323?

23. I am satisfied that the Panel did err.

24. What the Panel had to consider was the extent of Ms Neader’s impairment after the knee replacement; whether her pre-existing arthritis contributed to that impairment and if it did, what proportion of the impairment was due to the arthritis.

25. The Panel was satisfied that the findings on the radiological material it had to consider were consistent with the presence of longstanding pre-injury pathology in the injured body part, despite the absence of symptoms. There was no issue that Ms Neader had suffered arthritis before her workplace injury which was largely asymptomatic.

26. The result of her injury was that she later required a knee replacement which left her with a measurable impairment. What was thus in issue was the extent of Ms Neader’s impairment after the knee replacement and whether her arthritis made any contribution to it.

27. The deduction required by s 323 did not depend on the mere existence of a preexisting condition. It required a consideration of any evidence which established that the arthritic condition contributed to Ms Neader’s level of impairment after the knee replacement. If it did make a contribution to that impairment, an assessment had to be made as to the extent of its contribution, so that a deduction could be arrived at. If it did not there could be no deduction.

28. What the Panel referred to in the short reasons it gave was the MRI taken three weeks post-surgery, which was non-weight bearing and which it considered made arthritis in the medial compartment of Ms Neader’s knee “appear less severe than would likely be seen on a weight bearing film”. It also referred to the surgeon having earlier noted the presence of significant osteoarthritis in her knee which had been aggravated by the appellant’s injury. That being consistent with even earlier GP records that she had injured her knee and the problem with it was the result of severe osteoarthritis.

29. This was considered by the Panel to support its conclusion that Ms Neader had “significant pre-existing pathology sufficient to warrant a significantly larger deduction than the default 10% under s 323”, which it concluded was 30%.

30. It must be accepted that in so reasoning the Panel failed to apply s 323.

31. The Panel did not begin its assessment of what impairment Ms Neader had suffered after her knee replacement, by applying Table 17.35 of AMA 5, as it was bound to do, unlike the assessor. Nor did it explain how its application of that table resulted in a total of 59 points, which under the applicable Guideline resulted in a 20% impairment. But it plainly agreed with the assessor’s conclusions.

32. The Panel’s reasons reveal that it also came to the same conclusion as the assessor in relation to a 30% deduction for Ms Neader’s arthritic condition. But the reasons given do not establish that the Panel undertook the exercise which s 323 required, in arriving at that conclusion.

33. The Panel referred to the evidence which established the existence of the pre-existing arthritis, despite the absence of symptoms, about which there was no issue. But it did not explain its conclusions that the arthritis warranted a significantly larger deduction than 10%, which it assessed to be 30%.

34. A 30% deduction was not explained by the non-weight bearing MRI taken after the injury and before surgery, nor by the surgeon’s observation that Ms Neader’s arthritis had been aggravated by that injury, as the treating GP had considered at the time of the injury. Nor by the view that the degree of arthritis which the surgeon had observed could not have developed only after the injury.

35. The only explanation of the deduction arrived at was that “the totality of the treating medical material including radiology, the IME reports and lay evidence support a finding of a deduction in accordance with that found by the Medical Assessor in the amount of 30%.”

36. I am unable to accept that it may be inferred from this brief statement that the Panel’s 30% deduction rested on conclusions it arrived at about what contribution the evidence established Ms Neader’s arthritic condition had made to the 20% whole person impairment which she suffered after her knee replacement.

23. The Panel having failed to explain not only its conclusion about the degree of impairment it found post-surgery, having considered Table 17.35, but also why it concluded that Ms Neader’s arthritis had made a 30% contribution to that impairment, despite her knee having been completely replaced.

24. In arriving at that conclusion the Panel necessarily had to consider and explain why it rejected the case Ms Neader had advanced. Namely, that her arthritis had made no contribution to the impairment she was left suffering after the surgery, given that her knee had been completely replaced by the device which had been implanted in that procedure.

25. It follows that it must be accepted that the approach which the Panel adopted established that it failed to consider and determine what s 323 required. Namely, whether the impairment Ms Neader was left with after the replacement of her knee was due in any part to her pre-existing arthritic condition. Why it concluded that it was and why its arrived at the conclusion that the level of that contribution was 30%.

26. That could not rest only on the views which the Panel had formed about the severity of the arthritic condition which Ms Neader had suffered either before the workplace injury or before her surgery.

27. The Panel’s failure to adhere to the requirements of s 323 is a sufficient basis for the orders which Ms Neader sought to be made.

Were the reasons given inadequate?

42. I am also satisfied that Ms Neader’s case, that the short reasons which the Panel gave did not comply with its well understood obligations to give adequate reasons for its decision, must also be accepted.

43. Despite the very short explanation given, the insurer contended that the Panel had complied with the implied obligation to give reasons: Campbelltown City Council v Vegan (2006) 67 NSWLR 372; [2006] NSWCA 284 at [26] and [117]. As well as having met the standard discussed in Wingfoot Australia Partners Pty Ltd v Kocak (2013) 252 CLR 487; [2013] HCA 43 at [54]-[55]. That is, by having given reasons which were adequate to enable the Court to see whether the opinion did or did not involve any error of law and which explained the actual path of reasoning by which the Panel in fact arrived at its opinion on the medical dispute referred to it.

44. That having to be achieved in the context of the relevant history and the content of the submissions made by the parties, in identifying the issues for determination by the Appeal Panel: Kempe v Complete Community Services Pty Ltd [2022] NSWSC 1095 at [60].

45. On judicial review such reasons not being able to be examined with an eye keenly attuned to the perception of error: Minister for Immigration & Ethnic Affairs v Liang (1996) 185 CLR 259 at 291; [1996] HCA 6. They having to be read fairly in context and as a whole: New South Wales Land and Housing Corp v Orr (2019) 100 NSWLR 578 [2019] NSWCA 231 at [76]-[77].

The reasons were inadequate.

46. I have quoted the short explanation which the Panel gave for the conclusions which it arrived at. It is not readily followed even reading it in the way that the authorities require. The result of the approach which the Panel adopted, I am satisfied, is that it also did not meet the requirements to which it had itself referred. It must thus be accepted that the reasons which it gave were inadequate.

47. The Panel noted that where more than one conclusion was open, it is necessary to explain the conclusion preferred and where there are disputes about facts, that it may be necessary to refer to the material on which findings were based. It also referred to s 323.

48. But unlike the assessor the Panel did not explain its conclusion as to the level of Ms Neader’s impairment after the knee replacement, which the assessor had concluded was 20% impairment, having applied table 17.35.

49. That Ms Neader’s arthritic condition had contributed to this impairment was in issue. But why the Panel concluded that it had contributed to that level of impairment, so as to warrant the 30% deduction it arrived at, was not adequately explained.

50. That could not be left to inference. It required both a consideration of and explanation for the rejection of the case Ms Neader advanced, that her pre-existing arthritic condition could not have contributed to the impairment which the Panel had to assess, given that her knee had been totally replaced.

51. The merits of the Panel’s reasons do not arise to be considered and they must be considered as a whole without an eye to error. But not having given an explanation for the rejection of the case Ms Neader advanced, in order to explain the path of reasoning by which it in fact arrived at its opinion about the deduction s 323 required, I thus cannot see that the reasons which it gave were adequate.

52. They were rather so spare that they do not enable the opinion that the Panel did not fall into any error of law to be formed. To the contrary, I have concluded that the Panel did not adhere, as it had to, to the requirements of s 323.

53. It not having explained the actual path of reasoning by which it arrived at its final opinion, that there had to be a 30% deduction for Ms Neader’s pre-existing condition, that it adhered to s 323 is not apparent. That the conclusion which it arrived at rested on evidence which established that the arthritis which she suffered was contributing to the impairment she was suffering after the replacement of her knee, which was what the Panel had to assess, cannot simply be assumed or inferred from the reasons which it gave.

54. Nor did it explain how the evidence as to the severity of her arthritic condition before the knee replacement, the workplace injury having earlier exacerbated it, did not explain its contribution to the impairment she was left with after the knee replacement.

55. In the result I am satisfied that the orders Ms Neader sought must be made.

Costs

56. The usual costs order under the Uniform Civil Procedure Rules 2005 (NSW) is that costs follow the event. In this case that is an order that the defendant bear Ms Neader’s costs as agreed or assessed. Unless the parties approach within 14 days with short written submissions, that will be the Court’s order.

Orders

57. For the reasons given I order that:

1. The Panel’s certificate and reasons be set aside.

2. The matter be referred to the President of the Personal Injury Commission to be dealt with according to law.

3. Unless the parties approach within 14 days with short written submissions, the defendant is to bear Ms Neader’s costs as agreed or assessed.

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Decision last updated: 11 August 2025