State Super SAS Trustee Corporation Ltd v Perrin

[2016] NSWCA 232

Court of Appeal

Supreme Court

New South Wales

Medium Neutral Citation:

State Super SAS Trustee Corporation Ltd v Perrin [2016] NSWCA 232

Hearing dates:

2 August 2016

Decision date:

01 September 2016

Before:

Basten JA at [1];
Gleeson JA at [32];
Sackville AJA at [81]

Decision:

(1)   Extend the time for filing of the notice of appeal to 7 March 2016.

 

(2)   Appeal allowed.

 

(3)   Set aside the determination and orders made by Neilson DCJ on 2 November 2015 and in place thereof:

 

       (a)   Dismiss the appeal to the District Court;

 

       (b)   Make no order as to costs of the proceedings in the District Court.

 

(4)   Respondent to pay the appellant’s costs of the appeal in this Court.

(5) Respondent to have a certificate under the Suitors’ Fund Act 1951 (NSW).

Catchwords:

APPEAL – appeal from District Court’s residual jurisdiction – whether error in point of law – District Court Act 1973, s 142N – proceedings under Police Regulation (Superannuation) Act 1906, s 21 seeking to set aside decision of STC

 

WORKERS' COMPENSATION – entitlement to compensation - grant of gratuity under s 12D(1) – whether surgical treatment of neck reasonably necessary under Workers Compensation Act 1987, s 60 – whether primary judge found that as a result of certified “hurt on duty” injury proposed surgery reasonably necessary

SUPERANNUATION –former police officer – grant of gratuity sought for surgical treatment –decision by STC that proposed surgery not reasonably necessary – finding by primary judge that other causes of officer’s neck pain be excluded before proposed surgery reasonably necessary – whether exercise of incidental power under Superannuation Administration Act 1996, s 57

Legislation Cited:

District Court Act 1973 (NSW) s 142G, 142N
Police Regulation (Superannuation) Act 1906 (NSW) s 1, 3, 9A, 10, 10(1A), 10B, 12D, 21
Superannuation Administration Act 1996 (NSW) s 57
Trustee Act 1925 (NSW) s 57
Uniform Civil Procedure Rules 2005 (NSW) r 42.1, 51.9
Workers Compensation Act 1987 (NSW) s 4, 59, 60, 61 and 62

Cases Cited:

Bartolo v Western Sydney Area Health Service (1987) 14 NSWCCR 223
Commissioner of Police v Kennedy [2007] NSWCA 328
Perrin v SAS Trustee Corporation (No 2) [2015] NSWDC 345
Perrin v SAS Trustee Corporation [2014] NSWDC 203
Perrin v SAS Trustee Corporation [2013] NSWDC 191
Rose v Health Commission (NSW) (1986) 2 NSWCCR 32

Category:

Principal judgment

Parties:

State Super SAS Trustee Corporation Ltd (Appellant)
Scott David Perrin (Respondent)

Representation:

Counsel:
D Stanton/ J Harrison (Appellant)
C Birch SC/ P O’Rourke (Respondent)

  Solicitors:
SMK Lawyers (Appellant)
Walter Madden Jenkins (Respondent)

File Number(s):

2015/345370

 Decision under appeal 

Court or tribunal:

District Court of New South Wales

Jurisdiction:

Civil

Citation:

[2015] NSWDC 345

Date of Decision:

02 November 2015

Before:

Neilson DCJ

File Number(s):

RJ256/13

Judgment

1. BASTEN JA: The respondent was, until 8 November 2001, a member of the NSW Police Force. On 1 January 1998 he suffered a neck injury in a motor vehicle accident, whilst on duty. He ceased work on 20 July 1998 and was medically discharged in November 2001.

2. In September 2012, Dr Ashish Diwan, an orthopaedic surgeon at St George Hospital, recommended that the respondent undergo surgery on his cervical spine. The respondent applied for a payment under s 12D(1) of the Police Regulation (Superannuation) Act 1906 (NSW) (“the Police Regulation Act”) for a payment to cover the costs of the proposed operation. On 10 July 2013 the appellant, known in the legislation as “the STC”, declined to approve the payment on the basis that the proposed surgery was not considered “reasonably necessary”, for treatment of the work-related injury.

3. The respondent brought an appeal from that decision to the District Court, pursuant to s 21 of the Police Regulation Act. On 2 November 2015, the Court made orders in the following terms:[1]

“FINDS that provided the differential diagnoses of ulnar neuropathy at each elbow and median neuropathy at the right wrist be excluded as effective causes of the plaintiff’s pain (either by surgical intervention or by opinion following further testing), it is reasonably necessary that the plaintiff undergo surgical treatment between C3 and C7 as proposed by Dr Ashish Diwan in accordance with the procedure described by him in his evidence on 31 July 2015.

HEREBY ORDERS

(1)   The Defendant to pay the plaintiff’s costs as agreed or assessed.

(2)   Liberty to parties to apply … as to any further orders sought or any further issues related to medical treatment.”

1. Perrin v SAS Trustee Corporation (No 2) [2015] NSWDC 345 (Nielson DCJ).

4. The STC appealed from that decision, pursuant to s 142N of the District Court Act 1973 (NSW). The appeal is limited to an error in point of law. The STC asserted that the District Court failed to exercise the jurisdiction vested in it under s 21 of the Police Regulation Act. No payment was available under s 12D(1) unless the proposed surgery was “reasonably necessary” for treatment of the injury. To the extent that the finding made by the Court purported to address that question, it was answered in the negative.

5. The lengthy court process has done nothing to assist the respondent, or relieve his physical symptoms. All that can be said is that, almost four years after surgery was first recommended, a more sophisticated medical understanding of his condition has been achieved. However, on the evidence accepted in the District Court, the decision of the STC was correct and the appeal to that Court should have been dismissed. The finding made below did not constitute a proper exercise of the Court’s discretion and was not, in any event, formulated in terms of an enforceable order. The appeal to this Court should be allowed.

Statutory scheme

6. The provision under which the respondent made his claim, s 12D(1) of the Police Regulation Act, states:

12D   Gratuities to members hurt on duty in respect of loss of limbs, medical expenses etc

(1) STC may pay to a member of the police force who is hurt on duty or to a former member of the police force who was hurt on duty when he or she was a member of the police force a gratuity of such amount as STC determines, not exceeding the amount that, in the opinion of STC, would have been payable to the member or former member under Divisions 3, 4 and 5 of Part 3 of the Workers Compensation Act 1987 if the member were, or the former member had been, a worker for the purposes of that Act.

7. Although this provision appears to impose a limit on the quantum of any payment approved by the STC, by reference to the provisions in Pt 3 of the Workers Compensation Act 1987 (NSW), it also has the effect of requiring the claimant to satisfy the STC as to the relevant conditions prescribed by the Workers Compensation Act, before any payment can be made. Relevantly for present purposes, the liability to make a payment for medical or hospital treatment is to be found in s 60(1) of the Workers Compensation Act, which provides:

60   Compensation for cost of medical or hospital treatment and rehabilitation etc

(1)   If, as a result of an injury received by a worker, it is reasonably necessary that:

(a)   any medical or related treatment (other than domestic assistance) be given, or

(b)   any hospital treatment be given, or

(c)   any ambulance service be provided, or

(d)   any workplace rehabilitation service be provided,

the worker’s employer is liable to pay, in addition to any other compensation under this Act, the cost of that treatment or service and the related travel expenses specified in subsection (2).

8. The appeal to the District Court turned on the failure of the STC to be satisfied that the proposed treatment was “reasonably necessary”. The “appeal” was an exercise in the original jurisdiction of the District Court, which was required to form its own opinion as to that question. Accordingly, the Court heard extensive medical evidence in relation to the appellant’s condition.

Findings of fact

9. In order to obtain a payment for the cost of medical treatment (described in s 12D as a “gratuity”) the respondent needed to be in receipt of an annual superannuation allowance or have the benefit of a decision by the Commissioner of Police that the injury to which the claim related was caused by the respondent being “hurt on duty”. [2] When the respondent first sought a certificate from the Commissioner with respect to his neck injury, it was refused. After an appeal to the District Court was settled, on 27 September 2010, the Commissioner’s delegate certified that “the suffering by [the respondent] of the infirmity ‘cervical spondylosis with a degree of radicular symptoms left arm’… was caused by the member being hurt on duty.” Accordingly, the question was whether the proposed surgical treatment was reasonably necessary to alleviate symptoms caused by that injury.

   2. Police Regulation Act, s 12D(3)(a), (4)(a).

10. On 23 December 2013 the respondent saw Dr Michael Davies, a neurosurgeon, who set out in a report prepared on the same day the following account of the respondent’s condition, set out by the primary judge at [56]:

“Mr Perrin reports ongoing neck and shoulder pain and symptoms in the upper limbs, which he said are gradually worsening over time. He feels that he's losing strength in his upper limbs, particularly the left upper limb. He currently describes pain around the left posterolateral aspect of the head and neck that radiates into the left shoulder and to a point about midway between the shoulder and the elbow. He gets intermittent shooting pain along the ulnar aspect of the left forearm and also along the dorsal aspect of the left forearm. He gets clawing of the second and fifth fingers of the left hand at times. Over the last 12 months or so he has noticed intermittent clawing of the third to fifth fingers in the right hand. He reports numbness in both hands and intermittent numbness along the ulnar aspect of the left forearm. He told me that he recently burnt his left hand because he could not tell how hot the water was in the shower. He has difficulty opening jars, turning door handles and turning taps with his hands. Mr Perrin tries to avoid moving his neck too much because this exacerbates his pain."

11. The medical evidence indicated a difference of opinion amongst the experts as to whether surgical treatment of the cervical spine would be beneficial with regard to these symptoms. In particular, there was considerable doubt that it would assist the “ulnar neuropathies at each elbow”, which, by April 2014, Dr Diwan saw as a possible cause of the symptoms. [3]

    3. Judgment at [59].

12. The respondent was also seen on a number of occasions by Dr Michael Ryan, a clinical Associate Professor of orthopaedic and spinal surgery. The judge relied upon a passage from Dr Ryan’s report of 4 August 2014 in the following terms:[4]

“The fact that Mr Perrin's left ulnar nerve is easily palpable and has a thick band behind the medial epicondyle, when I examined in 2012 suggested that the changes were already well established. It may be associated with a mutation in one copy of the gene PMP22 (peripheral myelin protein). As a result of this, the nerves are poorly insulated and this results in symptoms.

From my point of view, the fact that the left ulnar nerve appears to be thickened may be associated with hypertrophic neuropathy, acromegaly, Guillain-Barre Syndrome, amyloid or leprosy. It is also associated with diabetes. Perhaps the last of these is the explanation for that physical sign."

4. Judgment at [64].

13. In the same report, Dr Ryan concluded:

“I would not offer Mr Perrin spinal surgery as there is no pressing neurological reason to do so.

Instead I would refer him for multi-disciplinary pain management.

In relation to the plaintiff generally, your prognosis for the plaintiff;

Mr Perrin is likely to continue to suffer from neck pain. The outcome for his peripheral neuropathies is less certain as his particular entity or entities have [not?] yet been adequately defined.”

14. As the trial judge commented, there was an unfortunate lack of communication between the medical experts, prior to the trial. When the reports of the various neurologists were put to Dr Diwan in the course of his oral testimony, the following exchange took place: [5]

“Q. I take it, before you proceed with the surgery you would prefer for him to have his neuropathy dealt with, treated, is that a fair statement?

A. So my criteria for, you know, offering him when he comes to surgery, what are the things I’ll do before surgery. They will include things like, there has to be a quarantine period of at least three months after his proceedings are over because that will allow him to time to dissolve [resolve?] things in his own mind a little bit, number one. Number two, I will get him to see Dr Schwartz again and possibly repeat the neuro-physiological studies; number three, I’ll repeat an MRI scan; number four, I’ll have a case conference with Dr Jones; and then make a decision as to how best to proceed. Whether to operate, question number one, or not; that will be one that we will address. Number two, if to operate elbow alone or neck alone or both together. So there’ll be those, all those four options that we will go through. So when he comes to surgery that is the protocol we will follow.”

5.    Tcpt, 31/07/15, pp 69-70.

15. Following that answer, the judge asked, pertinently, “Why are we here then?”. [6]

    6.    Tcpt, p 70(20).

Conclusions reached by trial judge

16. The trial judge set out his conclusions in the following passage:[7]

“I have reached the view that it may be necessary to provide the operative treatment proposed by Dr Diwan, if it can be established that the major cause of the plaintiff's pain results from neurological damage at the level of the neck; that is, in essence, whether the plaintiff's pains are radicular, that they are caused by nerve root compression caused by bulging or protruding or herniated discs in the cervical spine. However, it appears to me that before that can be ascertained, the plaintiff's ulnar neuropathies should be investigated and perhaps treated to see whether the performance of that treatment ameliorates the plaintiff's symptoms. The problem legally is that there is no suggestion here that the ulnar neuropathies at each elbow and the carpal tunnel syndrome in the right wrist were caused by the injury to the plaintiff's neck on 1 January 1998. Those are not compensable conditions.”

7. Judgment at [83].

17. The judge then set out a number of steps which he said that, if he were the plaintiff, he would adopt. Several of the steps reflected the evidence of Dr Diwan set out above. Step 6 was as follows: [8]

“6. It may well be that if treatment and/or surgery is provided by Dr Jones to the plaintiff's elbows, that the plaintiff's symptoms will be largely relieved and he might decide not to proceed with cervical surgery. However, even if treatment provided by Dr Jones does not relieve the plaintiff's symptoms, then it appears to me that it would be justifiable in the circumstances for the plaintiff to undergo the surgery proposed by Dr Diwan.”

8.    Judgment at [84](6).

18. Finally, before outlining the finding which he proposed to make, the judge stated:[9]

“I initially thought that I should limit that surgery to surgery at C6-7 and C5-6, as initially proposed by Dr Diwan, but on reflection, and looking at the various medical reports, it appears to me that it might be prudent to give to Dr Diwan the permission to carry out surgery between C3 and C7 provided that there is some persuasive evidence that the plaintiff's symptoms are alleviated [caused?] mainly by the condition of his cervical spine. Of course, whether the plaintiff's symptoms are mediated by his cervical condition might be able to [be?] clarified by the facet joint injections for which Dr Diwan sought permission on 18 February 2015. I do not know whether permission was given for that treatment but if that were currently before me I would give permission for that treatment; the treatment proposed, injections at two levels of the cervical spine on three different occasions. It may be prudent to increase the number of levels for the facet blocks to each of the levels between C3 and C7.”

9. Judgment at [85].

Determination of appeal

19. The determination of the appeal to this Court turns on the proper identification of the issue in dispute between the parties. That is to be found in the decision of the delegate of the STC in rejecting the respondent’s claim, expressed in the following terms:

“… we have determined that the claimed treatment for Anterior Cervical Decompression and Fusion at C6-7 with Anterior Cervical Decompression and Disc Replacement at C5-C6 is not reasonably necessary as a consequence of your infirmity, as required under s 60 of the Workers Compensation Act 1987, such that we will not approve the payment of said treatment under s 12D of the [Police Regulation Act].”

20. The claim itself was not in the materials before this Court; however, even if it extended to any other form of treatment (which may be doubted), nevertheless the only aspect of the claim which was determined was that set out above.

21. The statutory right of appeal arises in relation to “a decision made by STC on a matter that arises under this Act by reason of a member of the police force being hurt on duty.”[10] The powers of the District Court are identified in s 21 in the following terms:

    10. Police Regulation Act, s 21(1)(a).

21   Determination by District Court

…

(4)   The District Court, after considering an application under this section, may make a determination that the decision of STC or the Commissioner of Police, as the case may be, in respect of which the application was made:

(a)   be confirmed, or

(b)   be set aside and replaced by a different decision made by the District Court.

(5)   The District Court shall not make a decision referred to in subsection (4) (b) unless STC or the Commissioner of Police, as the case may be, could pursuant to this Act make that decision.

(6)   Where the District Court makes a decision referred to in subsection (4) (b), that decision shall, for the purposes of this Act, be deemed to be made by STC or the Commissioner of Police, as the case may be, and shall be carried into effect.

22. It is possible to read into the power to replace the decision with “a different decision”, albeit one which the STC could make, the possibility of going beyond that which was sought before the STC. However, that would not be an appropriate reading of the section in its context. The powers of the court are referrable to an “appeal”, that is a challenge to an initial decision of STC. The decision in fact made by the STC is the subject matter of the appeal, not a condition precedent to the exercise by the District Court of some independent and freestanding decision-making power. The decision to be made by the District Court must address the decision of the STC.

23. The statement of claim filed in the District Court, pursuant to s 21, sought an order in the following terms:

“The defendant pay a gratuity to the plaintiff for operative treatment on the plaintiff’s cervical spine pursuant to s 12D(1) of the Act, or such other treatment [as] the Court deems fit.”

24. It is possible that the final limb of that proposed order misled the trial judge into thinking that the Court had broader powers than it did. However, in this Court, the respondent took a different tack. Rather, he relied upon the powers of the STC granted under the Superannuation Administration Act 1996 (NSW) and, in particular, s 57:

57   Powers of STC

Without limiting any other function conferred or imposed on it, STC may do all things that are necessary or convenient to be done for, or in connection with, the exercise of STC’s functions.

25. Based on that provision, the respondent submitted that the decisions which may be made by the STC “extend to all decisions that may be necessary or convenient to the exercise by the appellant of its power to pay gratuities.” Accordingly, the powers were said to extend to the form of conditional determination made by the trial judge.

25. There may be circumstances in which medical treatment can be approved on a staged basis. Sometimes it will be highly desirable (and appropriate) to grant such approval in advance. Thus, it may be reasonably necessary to undertake exploratory surgery and, depending on what is revealed, to carry out a substantive procedure in the one operation. However, that is not this case. In this case the power of the STC was limited to determining whether a particular procedure was reasonably necessary as treatment for an infirmity identified as “cervical spondylosis with a degree of radicular symptoms left arm”, which was the infirmity certified by the Commissioner as caused by the member being hurt on duty. What was uncertain in this case was whether the proposed operation on the respondent’s neck was reasonably necessary to treat this condition. Treatment of his ulnar neuropathies, which the primary judge found were not causally related to the certified condition, was a separate matter. [11]

    11. See finding in last two sentences of passage set out at [16] above.

26. The factual finding of the primary judge was to the effect that he could not be satisfied that the surgical procedure for which payment was sought was reasonably necessary to ameliorate symptoms resulting from the condition of his cervical spine. Accordingly, the appeal should have been dismissed. The conditions which the judge identified as “ulnar neuropathy at each elbow and median neuropathy at the right wrist” were to be excluded as causes of the respondent’s pain because they did not fall within the certified infirmity. They were not, as the judge expressed it, “compensable conditions.”

Conclusions

28. Although the STC gave notice of its intention to appeal within the specified time, it was a little over a month late in filing the notice of appeal. There was no opposition to an extension of time for that purpose, which should be granted.

29. In circumstances where the appeal must be allowed, there is a question as to whether the matter must be remitted to the District Court for yet another hearing, or whether this Court can make a final order. Given that it is now more than three years since the decision of the STC under appeal and almost four years since Dr Diwan recommended the surgical procedure, it would be unfortunate if further delays were required before the proceedings were finally determined. Fortunately, it is neither necessary nor appropriate to remit the matter to the District Court. On the finding expressly identified by the primary judge as the basis of his decision, and recorded in the “orders”, the only available order was one dismissing the appeal. As there was no factual matter or discretionary matter remaining to be determined, this Court can make that order and should do so.

30. The appellant did not contend that the appeal to the District Court was frivolous or vexatious and thus accepted that it was not entitled to costs in the District Court. [12] Costs should follow the event in this Court, but the respondent should have a certificate under the Suitors’ Fund Act 1951 (NSW) for the costs in this Court.

    12. Police Regulation Act, s 21(9).

31. Orders should be made in the terms proposed by Gleeson JA.

32. GLEESON JA: This appeal concerns a decision of Neilson DCJ on 2 November 2015 in an application brought by the respondent, Mr Scott Perrin, pursuant to s 21 of the Police Regulation (Superannuation) Act 1906 (NSW) (the Police Regulation Act) to have two decisions made by the appellant (the Trustee) set aside and replaced: Perrin v SAS Trustee Corporation (No 2) [2015] NSWDC 345. The Trustee had twice determined that proposed surgical treatment of the respondent’s cervical spine was not reasonably necessary for his workplace injury, and had declined to pay the respondent a gratuity under s 12D(1) of the Police Regulation Act for the cost and expense of the proposed surgical treatment. His Honour did not formally set aside or make an order in place of the Trustee’s decisions. Instead, he made a determination in the form of a “finding” and orders as follows:

I FIND that provided the differential diagnoses of ulnar neuropathy at each elbow and median neuropathy at the right wrist be excluded as effective causes of the plaintiff’s pain (either by surgical intervention or by opinion following further testing), it is reasonably necessary that the plaintiff undergo surgical treatment between C3 and C7 as proposed by Dr Ashish Diwan in accordance with the procedure described by him in his evidence on 31 July 2015.

HEREBY ORDERS

(1)   The Defendant to pay the plaintiff’s costs as agreed or assessed.

(2)    Liberty to parties to apply… as to any further orders sought or any further issues related to medical treatment.

33. The Trustee appeals from that decision.

Background

34. The respondent is a former member of the New South Wales Police Force who was injured in the course of his work. On 1 January 1998, he was a passenger in a police vehicle which was struck from behind by a truck. He suffered a whiplash injury resulting in pain to his back and neck. He went off duty on sick report on 20 July 1998 until he was medically discharged from the Police Force on 8 November 2001.

35. The respondent subsequently applied for a “hurt on duty” superannuation allowance pursuant to the Police Regulation Act, ss 10 and 10B(2) in relation to infirmities affecting his neck, back and left knee. On 30 October 2008, the Police Superannuation Advisory Committee (PSAC) issued a certificate as delegate of the Trustee pursuant to s 10B(2) of the Police Regulation determining, relevantly, that the respondent was suffering from the infirmity of “cervical spondylosis with a degree of radicular symptoms in the left arm”. Subsequently on 27 September 2010, a delegate of the Commissioner of Police issued a certificate pursuant to s 10B(3) of the Police Regulation Act determining, relevantly, that the respondent was suffering from the infirmity of “cervical spondylosis with a degree of radicular symptoms” as a result of having been hurt on duty.

36. As a result of determinations made by the Trustee (on 30 October 2008) and the Commissioner of Police (on 27 September 2010), and a subsequent determination on appeal made by Gibson DCJ in the District Court on 20 September 2013, the respondent is in receipt of an annual superannuation allowance at the rate of 85 per cent of the respondent’s attributed salary of office (ss 9A and 10(1A)(a) and (b) of the Police Regulation Act) to be paid on and from 6 September 2007: Perrin v SAS Trustee Corporation [2013] NSWDC 191.

37. On 14 September 2012, Dr Diwan, the Chief of the Spine Service in the Department of Orthopaedic Surgery at St George Hospital, sent a request to the Trustee’s delegate, Allianz Australia Insurance Limited, for approval to perform surgery which he had recommended as reasonably necessary. The proposed operative treatment was identified in his report of 13 September 2012 as “surgical decompression and stabilisation by way of anterior cervical decompression and fusion at C6-7 and anterior cervical decompression and disc replacement at C5-6”. The Trustee treated this application as an application for a gratuity pursuant to s 12D of the Police Regulation Act for the payment of medical treatment and hospital treatment which, if made under the Workers Compensation Act 1987 (NSW) (Workers Compensation Act), would be compensation for the cost of medical or related treatment and any hospital treatment that was reasonably necessary as a result of any injury received by a worker: s 60(1), Pt 3, Div 3 Workers Compensation Act. The cost of the proposed treatment recommended in Dr Diwan’s report of 13 September 2012, including hospital costs, was later estimated to be approximately $80,000.

38. The Trustee sought opinions as to the need for this treatment. Dr Michael Ryan, a Clinical Associate Professor of Surgery Orthopaedics & Spinal Surgery, examined the respondent on 27 November 2012 and, in a report dated 11 December 2012, concluded that the proposed surgery was unlikely to help the respondent. Dr Ryan noted that the respondent’s neurological state had deteriorated remarkably over two years and found a “dense left sided ulnar neuropathy”. He considered it unlikely that the signs in the respondent’s hands were in any way related to his cervical spine and suggested that there may be a presence of peripheral neuropathy in the lower limbs. Dr Ryan recommended that the respondent undergo a detailed neurological assessment.

39. Dr Raymond Schwartz, a Neurologist, examined the respondent on 15 April and 30 May 2013 and, in a report dated 3 July 2013, concluded that there was insufficient evidence on neurological examination to support the proposed surgery by way of anterior cervical decompression. Dr Schwartz agreed with Dr Ryan that the proposed surgery was unlikely to help the respondent. Dr Schwartz’s initial view was that the respondent’s symptoms were likely to be multifactorial and arranged for neurophysiological studies to be carried out. Upon review of the respondent on 30 May 2013, Dr Schwartz expressed the opinion that the respondent was suffering from: (1) ulnar neuropathy at the level of the elbow to a moderate degree on the left and to a mild degree on the right; (2) mild median nerve dysfunction at the level of the wrist on the right consistent with carpal tunnel syndrome; and (3) a mild left C6/7 radiculopathy. Dr Schwartz recommended conservative measures.

40. On 14 December 2012, the Trustee, by its delegate, determined that the “claimed treatment of osteopathy is not reasonably necessary as a consequence of [the respondent’s] infirmity, as required under s 60 of the Workers Compensation Act 1987”, and declined to approve payment of the proposed treatment as a gratuity under s 12D of the Police Regulation Act. In reaching that decision, the Trustee relied upon a report from Dr Ryan referred to above.

41. On 10 July 2013, the Trustee, by its delegate, determined that “the claimed treatment of surgery for Anterior Cervical Decompression and Fusion at C6/7 with Anterior Cervical Decompression and Disc Replacement at C5/6 is not reasonably necessary as a consequence of [the respondent’s] infirmity, as required under s 60 of the Workers Compensation Act 1987” and, again, declined to approve payment of the proposed treatment as a gratuity under s 12D of the Police Regulation Act. In reaching that decision the Trustee relied upon the reports from Dr Ryan and Dr Schwartz, referred to above.

42. The respondent applied to the District Court pursuant to s 21 of the Police Regulation Act to have the decisions made by the Trustee set aside and replaced: Police Regulation Act, s 21(1) and (4).

43. In its defence, the Trustee asserted that it did not have power to make the decisions of 14 December 2012 and 10 July 2013 and, consequently, the District Court’s jurisdiction pursuant to s 21 of the Police Regulation Act was not enlivened. The Trustee’s contention was that a gratuity under s 12D of the Police Regulation Act regarding payment of medical expenses may only be made once the expenses have been incurred.

44. Neilson DCJ dealt with this jurisdictional defence as raising a separate question (although no formal order for determination of a separate question was made). In an interlocutory judgment given on 28 October 2014, his Honour rejected this defence. He found that the District Court has jurisdiction to make a finding that the surgery proposed for the respondent is reasonably necessary as a result of the respondent having been hurt on duty: Perrin v SAS Trustee Corporation [2014] NSWDC 203.

45. On 2 November 2015 Neilson DCJ made the determination and orders indicated above, following a hearing over three days.

Relevant legislative provisions

46. The relevant provisions of the Police Regulation Act are the definitions of “hurt on duty” and “STC” in s 1(2) and ss 3, 10, 10B, 12D and 21, respectively.

47. The expression “hurt on duty”, in relation to a member of the police force means injured in such circumstances as would, if the member were a worker within the meaning of the Workers Compensation Act 1987, entitle the member to compensation under that Act. “STC” is defined as the SAS Trustee Corporation continued under the Superannuation Administration Act 1996 (NSW) (the Administration Act).

48. Police Regulation Act s 3(1) establishes the “Police Superannuation Fund” which, subject to the Act, is under the control of STC. STC must pay out of the Fund, among others, the benefits provided by the Act: Police Regulation Act, s 3(3)(a).

49. Section 10(1A) provides for an annual superannuation allowance to a disabled member of the police force, which relevantly, is defined to include a former member of the police force who resigned or retired and is later certified (by the Trustee) pursuant to s 10B(2) to be incapable, from a specified infirmity of body or mind, of personally exercising the functions of a police officer referred to in s 14(1) of the Police Act 1990 (NSW) at the time of the member’s resignation or retirement, that infirmity being determined, pursuant to s 10B(3) by the Commissioner or on appeal, to have been caused by the former member having been hurt on duty when he or she was a member of the police force.

50. Section 12D of the Police Regulation Act is headed, "Gratuities to members hurt on duty in respect of loss of limbs, medical expenses, etc". As indicated, the reference to “STC” is to SAS Trustee Corporation. Section 12D provides:

(1) STC may pay to a member of the Police Force who is hurt on duty or to a former member of the Police Force who was hurt on duty when he or she was a member of the Police Force a gratuity of such amount as STC determines, not exceeding the amount that, in the opinion of STC, would have been payable to the member or former member under Divisions 3, 4 and 5 of Part 3 of the Workers Compensation Act 1987 if the member were, or the former member had been, a worker for the purposes of that Act.

(2)   STC may pay a gratuity to a member of the Police Force under this section notwithstanding that the member is not discharged from the Police Force as a result of being hurt on duty.

(3)   STC shall not grant a gratuity under this section to a member or former member of the Police Force unless:

(a)   an annual superannuation allowance is payable to the member or former member under section 10 in respect of an infirmity of body or mind arising out of the same injury to which the claim for the gratuity relates, or

(b)   where an annual superannuation allowance is not so payable, the injury to which the claim for the gratuity relates is determined, pursuant to subsection (4) or on appeal, to have been caused by the member being hurt on duty or the former member having been hurt on duty when he or she was a member of the Police Force.

(4)   Where a member or former member of the Police Force claims a gratuity under this section (otherwise than in respect of an injury referred to in subsection (3)(a)), the Commissioner of Police must:

(a)   decide whether or not the injury to which the claim relates was caused by the member being hurt on duty or the former member having been hurt on duty when he or she was a member of the Police Force, and

(b)   give written notice of the decision to STC and to the claimant.

(5)   Despite any other provision of this section or any other provision of this Act, a gratuity or part of a gratuity payable under this section may, with the approval of the Minister, be paid by a person other than STC and from a source other than the Fund.

51. The respondent’s right to appeal to the District Court as a person aggrieved by the Trustee’s decision is given by s 21 of the Police Regulation Act which provides:

21   Determination by District Court

(1)   A person who considers himself or herself aggrieved by:

(a)   a decision made by STC on a matter that arises under this Act by reason of a member of the police force being hurt on duty, or

(b)   a decision made by the Commissioner of Police under section 10A(1), 10B(3)(a), 12C(1), 12C(2) or 12D(4)(a),

may, within the period of 6 months after the person is notified of that decision, apply to the District Court for a determination in relation to that decision.

(2)    Notification of a decision under subsection (1) is to be given in writing.

(3)    STC or the Commissioner of Police, as the case may be, is entitled to be represented at the hearing of an application under this section.

(4)    The District Court, after considering an application under this section, may make a determination that the decision of STC or the Commissioner of Police, as the case may be, in respect of which the application was made:

(a)    be confirmed, or

(b)    be set aside and replaced by a different decision made by the District Court.

(5)    The District Court shall not make a decision referred to in subsection (4)(b) unless STC or the Commissioner of Police, as the case may be, could pursuant to this Act make that decision.

(6)    Where the District Court makes a decision referred to in subsection (4)(b), that decision shall, for the purposes of this Act, be deemed to be    made by STC or the Commissioner of Police, as the case may be, and shall be carried into effect.

(7)    (Repealed)

(8)    The District Court, after hearing an application under this section, may assess the costs of the successful party to the application (including costs of representation and witness expenses, if any) and order that the costs so assessed or any part of them be paid to the successful party by any other party within a time specified in the order.

(9)   The District Court shall not order the payment of costs under subsection (8) by the applicant for a determination under this section unless satisfied that the application was frivolous or vexatious or was made fraudulently or without proper justification.

(10)    Where costs assessed under subsection (8) are not paid within the time specified in the order made under that subsection in respect of them, the person in whose favour the order was made may recover the costs in a court of competent jurisdiction as a debt due to that person by the person against whom the order was made.

(11)    In this section:

District Court means the District Court of New South Wales established by the District Court Act 1973.

52. The relevant provisions of the Workers Compensation Act1987 (NSW) (the Workers Compensation Act) are the definition of “injury” in s 4 and ss 59, 60, 61 and 62 respectively.

53. The definition of “injury” in s 4, relevantly, means personal injury arising out of or in the course of employment.

54. Section 59 defines “medical or related treatment” as including, and relevantly, treatment by a medical practitioner, but does not include Ambulance Service, hospital treatment or workplace rehabilitation service.

55. Section 60 of the Workers Compensation Act provides:

(1)   If, as a result of any injury received by a worker, it is reasonably necessary that:

(a)   any medical or related treatment (other than domestic assistance) be given, or

(b)   any hospital treatment be given, or

(c)    … [not extracted];

(d)   … [not extracted]..

the worker’s employer is liable to pay, in addition to any other compensation under this Act, the cost of that treatment or service and the related travel expenses specified in subsection 2.

…

(3)   Payments under this section are to be made as the costs are incurred, but only if properly verified.

56. The rates that are applicable for such treatments are specified in s 61 in relation to medical or related treatment and s 62 in relation to hospital treatment. It is unnecessary to refer to the detail of these provisions.

57. One further matter should be mentioned. In addition to the powers conferred upon the Trustee under the Police Regulation Act, the appellant has the powers conferred under the Administration Act, as well as powers under the Trustee Act 1925 (NSW), in particular Div 2 of Pt 2, not otherwise inconsistent with the superannuation legislation: s 49, Administration Act. The principal ancillary power conferred under the Administration Act is contained in s 57, which provides:

57   Powers of STC

Without limiting any other function conferred or imposed upon it, STC may do all things that are necessary or convenient to be done for, or in connection with, the exercise of STC’s functions.

The primary judge’s reasons

58. After an extensive review of the medical evidence, and reference to authorities on the meaning of “reasonably necessary” medical treatment, including Rose v Health Commission (NSW) (1986) 2 NSWCCR 32 at [47] (Burke CCJ), the primary judge identified (at [82]) the real question as being the actual or potential effectiveness of the treatment proposed by Dr Diwan. His Honour approached that inquiry on the basis that the words “reasonably necessary” do not require the absolute necessity for the surgery proposed; rather, the adverb “reasonably” modifies the strictness or exactitude of the adjective “necessary”. Applying the formulation of Burke CCJ in Bartolo v Western Sydney Area Health Service (1987) 14 NSWCCR 223, his Honour stated that whether it can be said that the respondent should not do without the proposed surgery really boiled down to: will the treatment be effective.

59. On that issue, the primary judge made the following critical finding at [83]:

I have reached the view that it may be necessary to provide the operative treatment proposed by Dr Diwan, if it can be established that the major cause of the plaintiff's pain results from neurological damage at the level of the neck; that is, in essence, whether the plaintiff's pains are radicular, that they are caused by nerve root compression caused by bulging or protruding or herniated discs in the cervical spine. However, it appears to me that before that can be ascertained, the plaintiff's ulnar neuropathies should be investigated and perhaps treated to see whether the performance of that treatment ameliorates the plaintiff's symptoms. The problem legally is that there is no suggestion here that the ulnar neuropathies at each elbow and the carpal tunnel syndrome in the right wrist were caused by the injury to the plaintiff's neck on 1 January 1998. Those are not compensable conditions.

60. At [84], the primary judge set out a 7-step process as to how, if he were the respondent, he would proceed. This included obtaining updated neurophysiological studies; consultation with Dr Hugh Jones, an orthopaedic surgeon, as to whether the respondent’s symptoms were mainly or largely due to elbow pathology and, if so, whether they could be improved by treatment such as injections into the elbows or perhaps surgery at the elbows; obtaining the advice of Dr Jones and Dr Diwan as to the optimum treatment intended to relieve the respondent’s symptoms; and in the event of a disagreement between Dr Jones and Dr Diwan, obtaining an independent “second opinion” from a respected orthopaedic surgeon as to the better or best way to proceed. Step 6 was as follows:

[6]. It may well be that if treatment and/or surgery is provided by Dr Jones to the plaintiff’s elbows, that the plaintiff’s symptoms will be largely relieved and he might decide not to proceed with cervical surgery. However, even if treatment provided by Dr Jones does not relieve the plaintiff’s symptoms, then it appears to me that it would be justifiable in the circumstances for the plaintiff to undergo the surgery proposed by Dr Diwan;

61. His Honour noted that the surgery initially proposed by Dr Diwan involved surgery at C6/7 and C5/6 and continued (at [85]):

It appears to me that it might be prudent to give Dr Diwan the permission to carry out surgery between C3 and C7 provided that there is some persuasive evidence that the plaintiff’s symptoms are alleviated mainly by the condition of his cervical spine.

His Honour’s reference to “alleviated” should be understood as “caused”.

62. At [91], his Honour made the finding in terms of the determination set out in the orders made on 2 November 2015: see [32] above.

Nature and grounds of the Appeal

63. An appeal to this Court from an award of the District Court in its residual jurisdiction is limited to one where a party is aggrieved by an award of the court in point of law: District Court Act 1973 (NSW) (District Court Act), s 142N(1). The term “award” is defined in the District Court Act, s 142M(1) to include an interim award, order, decision, determination, ruling and direction. The reference in s 142N(1) to the “residual jurisdiction” of the District Court means the jurisdiction conferred on the District Court by the operation of the Compensation Court Repeal Act 2002 (NSW): District Court Act, s 142G. This, relevantly, includes jurisdiction to make determinations under s 21 of the Police Regulation Act.

64. The main point of law identified by the Trustee is whether the District Court, standing in the shoes of the Trustee, has power under s 12D of the Police Regulation Act to make a conditional determination (ground 1). The Trustee also asserted that there had been a constructive failure to exercise the jurisdiction conferred on the District Court by s 21 of the Police Regulation Act because his Honour had failed to have any or any proper regard to the unchallenged medical evidence of Dr Ryan and Dr Schwartz, and failed to make a finding on the balance of probabilities that cervical surgery was reasonably necessary to treat Mr Perrin’s cervical spondylosis (ground 2).

65. The focus of debate in oral argument was directed to the first ground, it being common ground that if this ground was made out it was unnecessary to consider the second ground.

Submissions – Ground 1

66. The Trustee submitted that the primary judge made a decision beyond the scope of that which the Trustee was capable of making under s 12D of the Police Regulation Act, because his determination on the need for surgery was predicated upon the resolution of an antecedent medical question concerning the cause of symptoms, including the manner of the investigation. It was submitted that the Trustee, and in turn the District Court on appeal, has no power to pay a gratuity on the condition that other alternative pathologies are first excluded as a cause of the respondent’s symptoms and disability.

67. The Trustee pointed to the advice from the primary judge regarding the steps that ought to be taken by the respondent before embarking upon the surgery contemplated by Dr Diwan as reinforcing the conclusion that his Honour failed to determine whether the proposed medical treatment was reasonably necessary as a result of the certified injury.

68. The respondent accepted that the whole of the medical evidence clearly established that it was prudent to first exclude the possibility that all, or the bulk of, the symptoms suffered by the respondent could be resolved simply by treatment for ulnar neuropathy, either by injections into the elbows or perhaps surgery to the elbows. Nonetheless, the respondent submitted that it was open to the Trustee and to the District Court to determine whether or not a future medical procedure would be justified, conditional upon some step or steps being first taken that might exclude the necessity for the operation.

69. In support of this approach to the Trustee’s powers, the respondent referred to notions of common sense and convenience, arguing that the contingencies and uncertainties surrounding any medical procedure supported the primary judge’s conclusion that there existed the requisite power to make conditional determinations.

70. The respondent also referred to the powers of the Trustee under s 57 of the Administration Act (set out at [57] above) and submitted that it was “convenient” that the Trustee make a decision to conditionally pay for an operation where the condition involves the member’s treating doctors satisfying themselves, before performing the medical treatment, that it is necessary.

Decision

71. The starting point is to observe that s 21(5) of the Police Regulation Act limits the District Court to substituting decisions of a sort that, relevantly, the Trustee could have made pursuant to the Police Regulation Act. This requires the District Court to stand in the shoes of the Trustee as the decision-maker: Commissioner of Police v Kennedy [2007] NSWCA 328 at [40].

72. Next, it is necessary to direct attention to the terms of the determination made by the primary judge. The reasoning (at [83]) leading to his Honour’s conditional finding (at [91]) that the proposed surgery recommended by Dr Diwan is reasonably necessary has been set out at [61] above. Two observations can be made.

73. First, the primary judge did not find that, as a result of the certified “hurt on duty” injury received by the respondent, it is “reasonably necessary” that the proposed medical treatment be given to the respondent. This is clear from the opening sentence of [83] where his Honour states that “it may be necessary to provide the operative treatment proposed by Dr Diwan, if it can be established that the major cause of the [respondent’s] pain results from neurological damage at the level of the neck” [emphasis added].

74. Secondly, the actual finding by his Honour in [83] was that his Honour could not be satisfied that the operative treatment proposed by Dr Diwan is reasonably necessary while the respondent’s ulnar neuropathies needed to be investigated, and perhaps treated. Only then could the primary judge determine whether undertaking that treatment would relieve the respondent’s symptoms. His honour’s actual finding reflected the evidence given by Dr Diwan in cross-examination.

75. Dr Diwan agreed that, before proceeding with the proposed surgery, he would prefer the respondent to have his neuropathy treated, and outlined the protocol he would follow, which included further investigations by Dr Schwartz, including, possibly, further neurophysiological studies; a further MRI scan; and a case conference with Dr Jones for the purpose of deciding what was the appropriate treatment for the respondent’s ulnar neuropathies at each elbow.

76. It can be accepted that the Trustee’s powers include doing all things necessary or convenient in the exercise of its power, among others, to pay gratuities: Administration Act, s 57. However, the existence of that power does not assist the respondent’s argument seeking to uphold his Honour’s decision. The potential for the exercise by the trustee of the incidental power conferred by s 57 of the Administration Act does not exist if the primary power to pay gratuities under s 12D of the Police Regulation Act is unavailable. In the circumstances of the present case, one of the conditions for the exercise of the primary power to pay gratuities being the “reasonably necessary” criterion in s 60 of the Workers Compensation Act was not satisfied. Until the respondent’s non-compensable conditions (relating to his ulnar neuropathies) were investigated, and possibly treated, and the outcome of any treatment was known, his Honour could not be satisfied that the proposed surgery was reasonably necessary to alleviate the condition of the respondent’s cervical spine. Accordingly, the appeal from the Trustee’s decisions refusing to pay a gratuity should have been dismissed.

Extension of time for appeal

77. The Trustee filed a notice of intention to appeal on 24 November 2015 in respect of the decision made by the primary judge on 2 November 2015. The time for filing any notice of appeal expired on 2 February 2016: Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 51.9(1)(a). The notice of appeal filed on 7 March 2016 was a little over one month out of time. The Trustee sought an extension of time by a notice of motion filed on 8 March 2016 on the ground of the delay in obtaining a copy of his Honour’s oral reasons which were delivered over two days on 31 October and 2 November 2015. The respondent, most properly, did not object to the extension sought by the Trustee. It is appropriate that the extension be granted.

Conclusion and Orders

78. The time for filing of the notice of appeal should be extended and the appeal should be allowed. The “finding” or determination made by the primary judge and the orders relating to costs and liberty to apply should be set aside.

79. As to costs in this Court, there is no reason why costs should not follow the event: UCPR r 42.1. As to costs in the District Court, the Trustee, very fairly, did not contend that the respondent’s application to that court was frivolous or vexatious or was without proper justification: Police Regulation Act, s 21(9). Accordingly, there should be no order as to costs in the District Court.

80. I propose the following orders:

1. Extend the time for filing of the notice of appeal to 7 March 2016.

2. Appeal allowed.

3. Set aside the determination and orders made by Neilson DCJ on 2 November 2015 and in place thereof:

1. Dismiss the appeal to the District Court;

2. Make no order as to costs of the proceedings in the District Court.

4. Respondent to pay the appellant’s costs of the appeal in this Court.

5. Respondent to have a certificate under the Suitors’ Fund Act 1951 (NSW).

81. SACKVILLE AJA: I agree with the orders proposed by Gleeson JA and with his Honour’s reasons. I add the following observations.

82. Section 12D(1) of the Police Regulation (Superannuation) Act 1906 (Police Regulation Act) provides that the appellant (STC) may pay to a member of the police force who is hurt on duty a gratuity of such amount as STC determines, not exceeding the amount that, in the opinion of STC, would have been payable to the member under Part 3 of the Workers Compensation Act 1987 (NSW) (Workers Compensation Act), if the member had been a “worker” for the purposes of that Act. In this case, the respondent sought a gratuity to cover the cost of surgery on his cervical spine (proposed spinal surgery).

83. Mr Birch SC, who appeared for the respondent, did not dispute that s 12D(1) of the Police Regulation Act requires a claimant to satisfy s 60(1) of the Workers Compensation Act. Thus the respondent had to show that as a result of the injury he received on duty the proposed spinal surgery was “reasonably necessary”.

84. The fundamental difficulty with the determination of the District Court is that the findings made by the primary Judge are to the effect that the proposed spinal surgery is not yet reasonably necessary. [13] The findings make it clear that a determination that the proposed spinal surgery is reasonably necessary cannot be made until a separate, non-compensable surgical procedure (the elbow operation) is carried out. If the elbow operation relieves the symptoms experienced by the respondent, which on the evidence is quite possible, there would be no need for the proposed spinal surgery to take place.

    13. Perrin v SAS Trustee Corporation (No.2) [2015] NSWDC 345 at [83].

85. Contrary to Mr Birch’s submissions, this does not mean that STC can never grant a gratuity to a claimant in advance of a surgical or other medical procedure taking place where it is unclear whether the procedure will actually have to be performed. For example, if it is uncertain whether a particular operation is required unless and until exploratory surgery is performed, STC may nonetheless form the view that the procedure is reasonably necessary. STC could take into account (if it be the fact) that the procedure, if required, will have to be performed at the same time as, or very shortly after, the exploratory surgery.

86. Section 12D of the Police Regulation Act distinguishes between the payment of a gratuity (s 12D(1)) and the “grant of a gratuity” (s 12D(3)). This distinction indicates that STC has power to grant a gratuity to enable a procedure to be carried out, even if it is not certain that the procedure will ultimately be required or that a payment will have to be made. Thus surgery may be regarded as reasonably necessary by reason of a work-related injury, notwithstanding that there is a chance that more limited intervention will resolve the problem, or that surgery will prove to be impracticable.

87. The present case is different. The respondent not only has to undergo a discrete surgical procedure (the elbow operation) before any decision can be made as to whether the proposed spinal surgery is required. The elbow operation may well relieve symptoms that are unrelated to any injury the respondent received while on duty and, if the operation does so, the result may render the proposed spinal surgery unnecessary. As the primary Judge found, it is simply too soon to ascertain whether, as a result of an injury received while on duty, it is reasonably necessary for the proposed spinal surgery to take place.

88. The District Court, in discharging the functions conferred on it by s 21 of the Police Regulation Act, could have adjourned the case until the outcome of the elbow surgery was known. There was no dispute that the District Court, in exercising its powers under s 21(1) of the Police Regulation Act, could take into account developments after STC’s decision, such as the availability of additional diagnostic information as a consequence of the elbow surgery. However, in view of the findings made by the primary Judge, I do not think it was open to his Honour to make a determination that the proposed spinal surgery was reasonably necessary as the result of the injury the respondent received on duty.

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Endnotes

Decision last updated: 02 September 2016