Pascoe v Mechita Pty Ltd - [2019] NSWSC 454

Supreme Court

New South Wales

Medium Neutral Citation: Pascoe v Mechita Pty Ltd [2019] NSWSC 454
Hearing dates: 21 November 2018
Decision date: 24 April 2019
Jurisdiction: Common Law
Before: Button J
Decision:
(1) A declaration pursuant to s 69 of the Supreme Court Act 1970 (NSW) that the decision and the statement of reasons for decision of the third defendant, the Medical Appeal Panel, and issued by the second defendant, the Workers Compensation Commission of New South Wales, on 5 April 2018 is void and of no effect;
(2) An order setting aside the decision and the statement of reasons for the decision of the third defendant and issued by the second defendant on 5 April 2018;
(3) An order remitting the matter for fresh consideration by an appeal panel of the Workers Compensation Commission of New South Wales, that panel to be newly constituted; and
(4) The defendant, Mechita Pty Ltd, must pay the costs of the plaintiff, Mr Bruce Rex Pascoe, of the proceedings before me.

Catchwords: ADMINISTRATIVE LAW – judicial review – compensation for alleged workplace injury pursuant to s 9 of the Workers Compensation Act 1987 (NSW) – appeal panel found error in certificate issued by approved medical specialist – appeal panel assessed claim afresh – appeal panel made adverse finding about percentage of whole person injury – whether appeal panel denied procedural fairness by considering certain material without giving the plaintiff notice of that material – whether appeal panel’s decision was unreasonable
Legislation Cited: Workplace Injury Management and Workers Compensation Act 1998 (NSW)
Workers Compensation Act 1987 (NSW)
Cases Cited: Minister for Immigration and Border Protection v WZARH (2015) 256 CLR 326; [2015] HCA 40
Pereira v Siemens Ltd [2015] NSWSC 1133
Roads and Maritime Services v Rodger Wilson [2016] NSWSC 1499
Category: Principal judgment
Parties: Bruce Rex Pascoe (Plaintiff)
Mechita Pty Ltd (First Defendant)
The Workers Compensation Commission of New South Wales (Second Defendant)
The Medical Appeal Panel constituted by arbitrator Grahame Edwards and approved medical specialists Robert Payten and Henley Harrison (Third Defendant)
Representation:
Counsel:
DJ Hooke SC and E Grotte (Plaintiff)
GB Kennett SC and M Jaireth (First Defendant)
Solicitors:
Turner Freeman (Plaintiff)
Moray & Agnew (First Defendant)

File Number(s): 2018/205513

Judgment

Introduction

This is an application for judicial review of the determination made by a Medical Appeal Panel (the Panel) about the degree of impairment of Mr Bruce Rex Pascoe (the plaintiff) pursuant to the Workplace Injury Management and Workers Compensation Act 1998 (NSW) (the WIMA).
The first defendant (simply the defendant hereafter) is a former employer of the plaintiff, against whom he has brought proceedings pursuant to the Workers Compensation Act1987 (NSW) (the WCA). The second defendant, the Workers Compensation Commission of New South Wales, and the third defendant, the Panel, have entered submitting appearances.
The injury (for the purposes of s 4 of the WCA) for which the plaintiff seeks compensation from the defendant (pursuant to s 9 of the same Act) is binaural (that is, relating to both ears) hearing loss.
A medical dispute between the parties about the extent and causes of that injury was dealt with pursuant to Part 7 of Chapter 7 of the WIMA. It is a determination made by the Panel pursuant to that Part that is impugned in these proceedings.
Two broad grounds for review were relied upon by the plaintiff. The first is founded on the proposition that the Panel denied the plaintiff procedural fairness, in that it took into account scientific material adverse to him without providing either party with notice that it proposed to do so.
The second ground is founded on the proposition that the decision of the Panel is sufficiently unreasonable to constitute legal error. That is in turn founded on the proposition that, in coming to a determination about the degree of impairment of the plaintiff himself, the Panel placed too much emphasis on mean observations pertaining to large cohorts of persons. To express that more clearly: the proposition is that the Panel impermissibly reasoned from the general to the particular, and assumed that general observations about large numbers of people could apply to one person; that is, the plaintiff.

Background

It is convenient now to set out a sketch of the background of the matter in chronological form.
The plaintiff was born in September 1943.
Commencing in 1959 and concluding in 2014, he has held many positions of employment that exposed him to varying levels of noise. During that period, he experienced only six years of work between 1979 and 1985 that was not “noisy”, and from 1985 until 1990 was unemployed and was not in noisy environments.
From July 2014 until 10 October 2014, he was employed as a truck driver by the defendant.
On 27 March 2017, the plaintiff made a claim against the defendant for 33.90% binaural loss of hearing, which was said to equate to 13% whole person impairment (WPI).
I interpolate that, at the hearing before me, senior counsel for the plaintiff helpfully took me to the provisions in both Acts and the relevant Guidelines that: permit one to seek compensation from one’s last employer in the case of hearing loss; that call upon injuries that were not work related to be disregarded in such a claim; that similarly call upon work related injuries incurred outside New South Wales to be disregarded; that provide for the incorporation of various guidelines into the process of assessment pursuant to Part 7 of the WIMA; that provide a default deduction of 10% of impairment due to previous injury or pre-existing condition or abnormality “unless this assumption is at odds with the available evidence” (s 323(2) of the WIMA); that permit conversion of the percentage of hearing loss to percentage of WPI; and, finally, that impose the “bright line” that is significant with regard to the degree of WPI (s 66 of the WCA), and that can operate to the disadvantage of a person in the position of the plaintiff.
Because none of those were called into question by senior counsel for the defendant, I shall not pause to discuss them more deeply.
In his application, the plaintiff relied in part upon a report from an ear, nose and throat surgeon, Dr Scoppa. The report recounted a history from the plaintiff of gradual development of loss of hearing in the context of noisy employment over many years. It was noted that some of that employment had been outside New South Wales.
The doctor opined that the plaintiff had suffered 33.9% hearing loss in both ears as a result of his noisy employment, a figure that translates to 17% WPI.
After taking into account previous compensation received by the plaintiff for industrial deafness, Dr Scoppa arrived at a final amount of 13% WPI. That is, of course, above the cut-off point of 10%.
The defendant responded to the claim on 7 July 2017 through its insurer, and notified the plaintiff that it was disputing the proposition that the plaintiff suffered a hearing loss injury on the deemed date of 10 October 2014. An alternative report of Dr Williams was relied upon by the defendant.
In a nutshell, the report of Dr Williams, bearing in mind in particular the extended period during which the plaintiff worked outside New South Wales, was that the plaintiff had suffered 5.88% hearing loss in both ears arising from his employment in New South Wales. And bearing in mind the level of previous compensation afforded to the plaintiff, Dr Williams was of the view that there was no hearing loss arising from employment in New South Wales, above and beyond the previous level of compensation received.
The differences in the opinions of the doctors were important, because, as I have said, WPI below the level of 10% is not compensable pursuant to s 66(1) of the WCA.
In due course the medical dispute about the degree of hearing loss of the plaintiff, and about the resultant degree of WPI, was referred to an approved medical specialist (the specialist) pursuant to Part 7 of the WIMA.
The specialist issued a Medical Assessment Certificate (the certificate) on 28 November 2017. The basic mode of reasoning and calculation within the certificate are as follows.
First, the specialist conducted an examination, and found total hearing loss in both ears of 52.5%. A deduction was made for the effects of age, and a loading was applied for severe tinnitus (sounds perceived without external source, often ringing or buzzing). Those two adjustments led to 47% hearing loss in both ears.
Secondly, a further reduction of 8.1% was applied for “non-occupational hearing impairment”. That led to an assessment of work related hearing loss of 38.9%, with WPI of 19%.
Thirdly, on the basis that the noise exposures inside New South Wales and outside New South Wales were similar in intensity, time-weighted apportionment was thought by the specialist to be the most appropriate method of determining how much, if any, of the hearing loss of the plaintiff was to be ascribed to his employment in New South Wales. The apportionment arrived at by the specialist was 16/40.
Applying the time-weighted apportionment to the finding of loss of 38.9%, the specialist arrived at 15.6% both ear hearing impairment due to employment in New South Wales.
Fourthly and finally, a global deduction was made for the previous compensation, leaving a final calculation of further, uncompensated hearing loss related to employment in New South Wales of 7.6%, which in turn translates to 4% WPI.
The specialist rejected the “default” deduction for any proportion of the impairment that is due to any previous injury or any pre-existing condition or abnormality of 10%, to be found in s 323 of the WIMA, on the basis that it was “not reasonable”, and expressed the opinion that “apportionment based on years of exposure is more reasonable”.
Again, that determination of the dispute by the specialist was adverse to the plaintiff, in that the assessment of WPI was well below 10%.
The plaintiff appealed against the certificate, pursuant to s 327 of the WIMA. In a nutshell, the complaint of the plaintiff was that far too much reduction had occurred in the calculations of the specialist on the assumption that much of his work related hearing loss had been inflicted outside New South Wales.
The Panel found error in the approach of the specialist on the basis that the specialist used incorrect criteria to assess the percentage of impairment due to previous injury. The Panel found that the specialist assessed it on a time weighted basis, in the absence of sufficiently probative evidence about the degree of previous injury said to have contributed to the degree of permanent impairment.
The Panel then proceeded to examine the question for itself.
Having preferred the hearing test carried out by Dr Scoppa to that of Dr Williams, the Panel engaged in its own process of deduction, addition, apportionment, and translation to WPI.
In a nutshell, the Panel ascribed much of the hearing loss from which the plaintiff was found to be suffering to “constitutional/unknown aetiology”. Patently, to the extent that it ascribed much of the hearing loss of the plaintiff to factors that were not to do with work in New South Wales, that finding was adverse to his claim against the defendant.
Having deducted the hearing loss for which the plaintiff had been compensated in 1995, the Panel arrived at a final figure of 4% WPI. Yet again, that outcome was adverse to the plaintiff in the same way.
The Panel delivered its decision, and statement of reasons, on 5 April 2018. It is that decision that is said by the plaintiff to be amenable to judicial review.

Submissions of the plaintiff

In written submissions, the plaintiff focused upon the deduction adopted by the Panel for the component of the hearing loss of the plaintiff that was said to be not work related. The Panel had assessed that component as being 24.4% hearing impairment in both ears.
The first complaint of the plaintiff was that he had not been provided with procedural fairness with regard to that finding by the Panel. It was said that, up until the analysis of the Panel, there had indeed been some level of past deduction for that factor: 8.1% by the specialist, 11.4% by Dr Williams, and no such adjustment by Dr Scoppa. But there had been no sign that it would play such a large role in the determination of the Panel.
It was accepted by the plaintiff that, having found error on the part of the specialist about the question of the time weighted apportionment, it was incumbent upon the Panel to conduct its own assessment of the matter. But there had never been notice given by the Panel to the parties that the question of the non-work related component within the hearing loss would be as great as was ultimately determined.
Nor, it was said, was there obvious evidence of a pre-existing condition that should or must have alerted the plaintiff to the proposition that the finding by the Panel about non-work related impairment would or could be as great as it was ultimately found to be.
Furthermore, it was said in written submissions that the Panel “purported to apply a scientific formula” to the assessment of the degree of further occupational hearing loss that had not been applied by the specialist, or either of the doctors qualified by the parties.
It was said that the plaintiff had suffered a practical injustice, because he had not been given a fair opportunity to be heard about the application of this formula.
The plaintiff further contended in written submissions that this consequential denial of procedural fairness constituted a jurisdictional error committed by the Panel.
Separately, it was said that the process of reasoning adopted by the Panel, in coming to its conclusion about the degree of loss of hearing that was not work related, was founded on assumptions, in the absence of evidence.
Expanding upon that, the contention was that the ultimate determination that much of the hearing loss was to be ascribed to causes other than noisy employment was without evidence to that effect, direct or indirect. The proposition was that the Panel had extrapolated that thesis from a factual finding in the form of an “uphill slope” in hearing loss without any evidence supporting the thesis.
It was also said that the reasoning of the Panel assumed that generalisations could be made about hearing loss that apply to all persons, when in truth it was necessary to assess the plaintiff as an individual.
A third complaint that was made in the written submissions was abandoned at the hearing.
In oral submissions, the plaintiff submitted that his complaint, in a nutshell, was twofold.
First, the plaintiff was denied procedural fairness because the reliance by the Panel upon ISO tables 1999 to 2013 with regard to progressive hearing loss induced by noise (the ISO) was “out of the blue”; the plaintiff was therefore not aware of the significance of the ISO, and could not know to make submissions on it.
Secondly, the Panel’s decision was unreasonable because it used the ISO to extrapolate assumptions and hypotheses, rather than basing its decision on evidence.
The plaintiff expanded upon his two central contentions as follows.
In relation to the ground concerning procedural fairness, the plaintiff argued that paragraphs 67 and onwards in the Panel’s reasons for decision demonstrate that the percentage of non-work related injury arrived at was based on the ISO.
It was submitted by the plaintiff that he had never seen the ISO, and that they had come “out of the blue” – the ISO had not been mentioned by any of the doctors or in any written submissions, except for Dr Williams’ report. However, the plaintiff submitted that Dr Williams referred to the ISO for the purposes of a single and very general proposition that was, in effect, based on common sense.
The plaintiff further submitted that the use of the ISO was determinative of the Panel’s decision, and therefore the plaintiff should have had the chance to make submissions on it, or at least to investigate it with a further doctor.
In relation to the ground asserting an unreasonable outcome, the plaintiff submitted that the conclusions drawn from the ISO by the Panel were based on mean figures and assumptions as to the average decibels that the plaintiff was subjected to over certain years. Accordingly, it was submitted that the Panel calculated in an obscure and unsupported way that “X per cent” of hearing loss must have been non-work related injury.

Submissions of the defendant

In relation to the first ground, the defendant originally delineated in written submissions three reasons why the plaintiff was not denied procedural fairness.
First, the defendant stated that the plaintiff accepted that, after finding the certificate was affected by error, the Panel was empowered to conduct a fresh assessment in order to generate a new certificate.
It was submitted that paragraph 66 of the Panel’s decision sets out the basis for applying a 24.4% deduction, and that the Panel correctly followed the process stipulated by Garling J in Pereira v Siemens Ltd [2015] NSWSC 1133.
Secondly, the defendant argued that, even if the requirement for the Panel to determine the appropriate deductable proportion arising from a non-work related injury was critical to the Panel’s ultimate decision, it was open to the Panel to do so, as a consequence of s 323 of the WIMA. Further, it was said that that determination was based on material known to the parties.
The defendant also noted in this context that the plaintiff’s complaint concerned the reasoning process of the Panel; however, it was submitted that the Panel had no obligation to reveal its reasoning processes to the plaintiff, and the Panel was therefore not required to disclose to the plaintiff its proposed deduction for non-work related injury.
Thirdly, it was submitted that in truth the plaintiff’s criticism of the 24.4% deduction focuses on the numerical value of the percentage, rather than the reasoning process the Panel adopted to reach that figure. The defendant submitted that the plaintiff’s complaint therefore requires this Court to engage in impermissible “merits review” of the Panel’s decision.
With regard to the second complaint, the defendant rejected the proposition that the Panel relied solely upon assumptions and inferences when it determined the adverse deduction of 24.4%.
It was submitted that the Panel had all the materials relied upon for the original medical assessment, and that the Panel took these into account in reaching its decision.
The defendant extracted various paragraphs from the Panel’s decision in which, the defendant submitted, the Panel engaged in its assessment of the material before it, and set out its reasoning processes adequately.
The original position of the defendant sketched above was helpfully refined in oral submissions.
In relation to the first ground, the defendant in oral submissions conceded that the reliance by the Panel on the ISO introduced a new line of reasoning that was not flagged to the parties, and therefore the plaintiff was indeed denied procedural fairness.
However, the defendant submitted that the plaintiff waived his right to procedural fairness.
It was submitted that the plaintiff had knowledge that the Panel might rely on new factors of its own devising, as the Panel’s determination would (in accordance with Roads and Maritime Services v Rodger Wilson [2016] NSWSC 1499) be de novo after the identification of the error by the specialist for which the plaintiff had himself contended. Nonetheless, the plaintiff chose not to be heard, and agreed that the matter could be resolved on the papers.
In relation to the second ground, it was said that the Panel treated the ISO as a summary of raw data reflecting actual experiences of a large number of workers, and the likelihoods of hearing loss based on length and level of exposure to noise.

The defendant submitted that this use of the ISO did not contravene the requirements set out in Pereira, because the Panel explained the bases upon which it drew its inferences, admittedly not in a simplistic way. It was stated that the Panel was therefore not “hypothesising” or making assumptions; its thesis that the level of the plaintiff’s hearing impairment was unlikely to be solely because of work exposure was based on identifiable, and identified, evidence.

Determination

The first ground

In my opinion, the plaintiff is correct: it was a denial of procedural fairness for the Panel to take into account the ISO adversely to the plaintiff without giving him notice that it proposed to do so.
It is important to my reasoning that the ISO was not mentioned in the decision of the specialist, and barely mentioned in the report of Dr Williams. In other words, the plaintiff had no notice that this extrinsic material could play such an important role in the subsequent adverse determination.
Nor was the ISO incorporated directly or indirectly in the Guidelines that the Panel was called upon to apply in its task.
Speaking more generally, it is true, of course, that experts – whether in coming to an opinion, or giving evidence, or sitting on a Panel such as this – are permitted to take into account previously unmentioned material if it is unassailable, or can be understood to be within common knowledge, including that of the parties. For example, as I remarked in discussion with counsel, an expert is entitled to take into account the propositions that the sun rises in the East, or that gravity causes items to fall towards the ground, or that, other things being equal, locations are darker in the night time than they are in the day. And they can do so without elaboration, and without providing notice that they will do so.
But I do not believe that that characterisation can apply to the ISO. It can hardly be equated to propositions such as those; indeed, its provenance is unclear on the evidence before me, and its use by the Panel is complex to a layperson.
And in any event, the defendant did not rely upon any such line of justification for use of the ISO in the reasoning of the Panel. Rather, as I have recounted, the sole basis of resistance at the hearing to the proposition that the plaintiff had been denied procedural fairness was that the plaintiff, by agreeing to the Panel determining the matter “on the papers”, had waived any right to complain subsequently about a new matter such as the ISO being relied upon by the Panel in coming to its determination.
I do not accept that submission. As was conceded by the plaintiff during argument, his adoption of that position meant that he was (obviously) precluded from complaining, subsequent to an adverse outcome, about the fact that no oral hearing was conducted. But that is not the nub of the complaint: while the plaintiff was content with a determination on the papers, an inherent limitation of that process was that important, new, disputable material would not be taken into account as significant, let alone determinative. And yet, that is what happened here.
The other aspect of the matter that is important to my thinking is that it is not just that the ISO was significant to the determination of the Panel. It is also that the determination itself is significantly adverse to the plaintiff.
In other words, as part of accepting that the degree of procedural fairness that must be accorded is a flexible concept and to be determined according to the statute that creates the decision-making process under consideration, I consider it important that the significant consequence of this adverse determination is that no permanent impairment compensation is payable for a degree of WPI at 10% or less: see generally Minister for Immigration and Border Protection v WZARH (2015) 256 CLR 326; [2015] HCA 40.
In summary then: by taking into account the ISO adversely to the plaintiff without providing him with notice that it would do so, the Panel denied him procedural fairness; the ISO cannot be characterised as common sense or common knowledge, but rather is something quite specific and detailed; the important adverse consequence to the plaintiff of the determination by the Panel about the level of hearing loss and therefore WPI itself argue for the provision of procedural fairness of a level that encompasses notice with regard to the ISO; and it cannot be said that the plaintiff waived his right to be provided with such notice.
In all the circumstances, ground one should be upheld.

Ground two

Because of my firm view about ground one, ground two cannot be determinative of the outcome before me. Still and all, I think that I should deal with it contingently, albeit briefly.
As I have shown above, this ground impugned the process of reasoning adopted by the Panel. In particular, it impugned the line of reasoning whereby the Panel moved from the general to the particular in coming to its ultimate adverse opinion. To boil the complaint down to its essence, it is that mean outcomes observed in populations founded upon the ISO were applied to an individual in the person of the plaintiff.
In my view, it will only be in an extreme and manifest case that I would presume as a layperson to “overrule” the process of reasoning of three specialist medical experts about a medical matter.
As well as that, it is well known that unreasonableness in outcome must of itself be extreme to constitute legal error justifying judicial review.
Finally, it is true there will be cases in which one cannot safely argue from the general to the particular based upon a mean value. For example, merely because the mean value of new cars in Australia may be (speaking entirely hypothetically) $30,000, does not mean that cars are not available for sale in this country for $300,000.
On the other hand, there will be cases in which one can reason from the mean to a particular outcome. Speaking entirely hypothetically again by way of illustrative example, if the mean number of daily meals consumed per person in Australia is approximately three, one may reason that it is extremely unlikely that a person would consume 23 meals in a day.
In other words, the line of reasoning about which the plaintiff chiefly complains cannot be criticised as being illogical in all settings; it all depends on its context.
To state my understanding of the matter concisely, the Panel extrapolated from the audiograms of the defendant, in light of the ISO, that there must have been significant hearing loss suffered by the defendant that was “external” to any work related hearing loss.
Here, as a layperson seeking to understand complex medical extrapolations and calculations, I am not affirmatively satisfied that the line of reasoning adopted by the Panel was inherently unavailable to it, and constitutes legal error.
In short, if it stood on its own, I would not uphold ground two.

Costs

Each party explicitly conceded at the hearing that costs should follow my determination of the matter.

Orders

In accordance with the plaintiff’s summons of 4 July 2018, I make the following orders:

A declaration pursuant to s 69 of the Supreme Court Act 1970 (NSW) that the decision and the statement of reasons for decision of the third defendant, the Medical Appeal Panel, and issued by the second defendant, the Workers Compensation Commission of New South Wales, on 5 April 2018 is void and of no effect;

An order setting aside the decision and the statement of reasons for the decision of the third defendant and issued by the second defendant on 5 April 2018;

An order remitting the matter for fresh consideration by an appeal panel of the Workers Compensation Commission of New South Wales, that panel to be newly constituted; and

The defendant, Mechita Pty Ltd, must pay the costs of the plaintiff, Mr Bruce Rex Pascoe, of the proceedings before me.

**********

Decision last updated: 26 April 2019

Medium Neutral Citation:	Pascoe v Mechita Pty Ltd [2019] NSWSC 454
Hearing dates:	21 November 2018
Decision date:	24 April 2019
Jurisdiction:	Common Law
Before:	Button J
Decision:	(1) A declaration pursuant to s 69 of the Supreme Court Act 1970 (NSW) that the decision and the statement of reasons for decision of the third defendant, the Medical Appeal Panel, and issued by the second defendant, the Workers Compensation Commission of New South Wales, on 5 April 2018 is void and of no effect; (2) An order setting aside the decision and the statement of reasons for the decision of the third defendant and issued by the second defendant on 5 April 2018; (3) An order remitting the matter for fresh consideration by an appeal panel of the Workers Compensation Commission of New South Wales, that panel to be newly constituted; and (4) The defendant, Mechita Pty Ltd, must pay the costs of the plaintiff, Mr Bruce Rex Pascoe, of the proceedings before me.
Catchwords:	ADMINISTRATIVE LAW – judicial review – compensation for alleged workplace injury pursuant to s 9 of the Workers Compensation Act 1987 (NSW) – appeal panel found error in certificate issued by approved medical specialist – appeal panel assessed claim afresh – appeal panel made adverse finding about percentage of whole person injury – whether appeal panel denied procedural fairness by considering certain material without giving the plaintiff notice of that material – whether appeal panel’s decision was unreasonable
Legislation Cited:	Workplace Injury Management and Workers Compensation Act 1998 (NSW) Workers Compensation Act 1987 (NSW)
Cases Cited:	Minister for Immigration and Border Protection v WZARH (2015) 256 CLR 326; [2015] HCA 40 Pereira v Siemens Ltd [2015] NSWSC 1133 Roads and Maritime Services v Rodger Wilson [2016] NSWSC 1499
Category:	Principal judgment
Parties:	Bruce Rex Pascoe (Plaintiff) Mechita Pty Ltd (First Defendant) The Workers Compensation Commission of New South Wales (Second Defendant) The Medical Appeal Panel constituted by arbitrator Grahame Edwards and approved medical specialists Robert Payten and Henley Harrison (Third Defendant)
Representation:	Counsel: DJ Hooke SC and E Grotte (Plaintiff) GB Kennett SC and M Jaireth (First Defendant) Solicitors: Turner Freeman (Plaintiff) Moray & Agnew (First Defendant)
File Number(s):	2018/205513